When Apple Gets Hot, Tech Catches Fire

The big things this week are going to be the Federal Reserve's interest rate announcement (due Wednesday afternoon), and the October employment report (due Friday morning).

So buckle up because no doubt we're going to see a lot of pre-market and intraday volatility - which day traders live for, while regular investors just have to tolerate the ups and downs.

Speaking of ups and downs...

Last Friday, the markets were swept by rumors via economists at Blackrock and the Wall Street Journal that the Fed would include so-called "pivot language" in this week's post-meeting statement.

Plenty of Wall Street strategists have already poured cold water on that idea, but that may not stop traders from goosing the markets further this week anyway.

Either way, let's just enjoy the rally.

As for the reasons behind it...it reminds me of when I was a kid. My parents moved to southwestern Florida (the same area that was hit hard by Hurricane Ian last month). Our house was way out in the saltwater mangrove swamps, far from town.

Sometimes we would drive home at night from a football game... and you know how you can see animals' eyes reflecting in your headlight beams?

Well, we'd drive by something - all you could see were a pair of glowing orbs on the edge of the woods.

Maybe it was a deer, raccoon, bobcat... We'd back up the car to take a closer look; of course, it would be gone.

And all we could do was look at each other and say, almost in unison...

"What was that?"

To me, Friday looked like a stealth "flight to safety" rally.

Apple (AAPL) reported mixed quarterly earnings without too much negative drama. But more importantly, Amazon (AMZN) warned that things aren't shaping too well for holiday sales so far. And Facebook (excuse me, Meta (META)) disappointed investors yet again.

So in times of doubt, fund managers and big-time traders automatically buy "what's working" - which in this case means Apple, which rose 8% on Friday - its largest one-day gain of the past 2 years.

And let's face it, when the world's most valuable stock gets hot - the rest of the tech sector catches fire whether it deserves to or not.

Close behind Apple were old-school energy stocks, many of which rose to new all-time highs - even though oil prices (at $86 a barrel this morning) are below their "summer driving season" lows:

My response is to say "Let's enjoy the rally" and position ourselves for other rally candidates.

But let's also recognize that "bear market rules" still apply until proven otherwise - a dose of caution, a sense of risk, and lots of patience - goes a long way.

Jeff