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Opportunities in Apple and Gold

Mutual fund managers have had a love-hate relationship with Apple Inc. (NASDAQ:AAPL) over the past year.  The same can be true for SPDR Gold Trust (ETF) (NYSEARCA:GLD).  Both Apple and Gold fell out of favor recently, and although many mutual fund managers have owned positions in both Apple and the precious metal, as the first half of the year came to a close last week few of them actually wanted to report to their shareholders that they were holding either one.

Window dressing is the act of manipulating positions at the end of the quarter so that the quarterly mutual fund report offered to shareholders reflects positions that might be most attractive to those shareholders, even though it might not properly reflect the holdings of the mutual fund during that time period.  This is a common practice, and because mutual funds did not want to report sizable positions in Apple or Gold there was added selling pressure in both AAPL and the yellow metal as the quarter came to an end.

The question is both why, and where will these instruments go from here.  The fundamental rationale for the decline in Apple stems back further than any recent news event, and although Apple has an excellent product and the ability to sell into its channels, they must be much more innovative than they have been recently in order to stay ahead of the competition.  This is what caused shares to fall so dramatically before, but in recent weeks the selling pressure in Apple was due not only to the market itself having come under pressure, but also due to window dressing.

Gold, on the other hand, has been under pressure in even before the Federal Reserve hinted at tapering its monetary policy, and that was largely due to the stability in equity markets and the economy in general.  Gold is more in favor when monetary and fiscal policies are not well formulated, and although there may soon be changes to monetary policy the argument is that policies are at least reflecting current environments.  Risks are clearly still there, but unless monetary or fiscal policies begin to diverge from cohesion to economic conditions Gold may not regain the luster it once had.

In both cases investment risks are extremely high.  For Apple, if they don't innovate they will stagnate.  For Gold, unless serious problems happen again Gold will not likely shine any time soon.  However, in both cases, trading opportunities are quite clear.  Long-term investments appear to have more risk than short term trades in either one of these, so the focus here is absolutely on trading opportunities specifically.  Last Thursday stock traders daily identified opportunities in each.  Specific analysis has been offered to clients of stock traders daily with corresponding price targets. 

In both instances, the presence of window dressing by mutual funds at the end of the quarter added pressure to both Apple and Gold that would not otherwise be there and that has created opportunities for investors that believe short term gains lead to long term success.  This has not changed the underlying fundamentals of either one of these, but as of Thursday both Apple and Gold were oversold.

Triggers may have already come
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