Stocks finished up slightly on the day Tuesday after another volatile session; the S&P 500 added 0.1% and NASDAQ 0.2%. Just as with yesterday the market gapped up as investors seemed pleased with some rumblings out of Europe, but sold off all those gains. The market seemed to follow the path of Apple (AAPL) most of the day as the most watched company in the world fell to its 50 day moving average for the first time since late July. In truth, the stock was not down a lot but the weakness over the past week put it in the forefront of many people's thoughts.
Spain was also in the news as its prime minister said its request for a bailout was "not imminent" which led to a bout of selling; however the market bounced back from that as Apple bounced off its 50 day moving average.
Outside of those items, noted hedge fund manager David Einhorn, who flagged Lehman Brothers as a disaster waiting to happen well ahead of the herd, said very positive things about General Motors (GM) and negative things about former high flier Chipotle Mexican Grill (CMG). Both stocks reacted immediately; there is now a verb for the market's reaction to this man's comments: "getting Einhorned".
- Joking about a recent Wall Street Journal story suggesting that stocks affected by his comments have been "Einhorned," the hedge-fund manager said dryly that "apparently now I'm a word."
- Einhorn touted the automaker GM as a stock that is seen as an "ugly duckling" to the market that is nonetheless "much healthier now" than just a few years ago, when it filed for bankruptcy protection. The hedge-fund manager ran through a laundry list of attractive aspects to the stock, including an improved cost structure, a cleaner balance sheet, and pension and health-care liabilities not nearly as big as investors seem to fear.
As for the indexes, we have the S&P 500 and NASDAQ both moving sideways below recent highs. With the NASDAQ in particular if there is not a move up in relatively short order the risk of a bearish "head and shoulders" formation is increasing. A move back over 3150 soon would be of benefit to the bulls.
Things remain rosier in the S&P 500 but obviously if the NASDAQ fails in the future, the S&P 500 is not going to prosper in a vacuum.