Wonder Why AAPL IS Over Valued?

Ten Biggest ETF Holders Of Apple Stock

Posted by ETFChannel.com

According to ETFChannel.com’s Top ETF Components list, Apple (AAPL) is the single largest U.S. equity position of exchange-traded funds in the aggregate. ETFs hold approximately $9.7 billion of Apple stock, or about 3.7% of Apple’s market capitalization.

To put this in perspective, ETFs own about $4.5 billion of IBM (IBM), or only 2.6% of IBM’s market cap.

The PowerShares QQQ (QQQQ) is the largest ETF holder of Apple at about $4.3 billion, or nearly 20% of the total holdings of the ETF. The SPDR S&P 500 ETF (SPY) is next in line at about $2 billion of Apple.

Ten ETFs with the largest Apple holdings:

ETF	Ticker	AAPL Weight	AAPL Amount
PowerShares QQQ	QQQQ	19.86%	$4,434,713,483
S&P 500 SPDR ETF	SPY	2.51%	$2,035,363,452
iShares S&P 500 Index	IVV	2.51%	$579,985,161
Technology Select Sector SPDR	XLK	11.75%	$509,605,382
iShares Russell 1000 Growth Index	IWF	4.38%	$479,374,141
Vanguard Total Stock Market ETF	VTI	2.12%	$315,406,889
iShares S&P 500 Growth Index	IVW	5.01%	$257,232,748
Vanguard Growth ETF	VUG	4.58%	$200,791,091
iShares D.J. U.S. Technology Sector	IYW	13.09%	$161,920,325
Vanguard Information Technology	VGT	10.44%	$132,265,227

Last Week This Week

S&P index futures made a new weekly high since putting in July lows. April highs over 1200 still casting a shadow on current trade however as quiet trade prevails.

Commodities have had all the happy money, which is not necessarily a sign of anything important other than the art of buying what is rising is still the fundamental proof of great money managers. Gold, oil, and grains are the next death dive, but timing is everything.

Chinese Premier Wen still prone to hyperbole with last week crying about the ills of protectionism and over the weekend acknowledging inflation is just possibly a problem. He and the guys down the hall from his office that type up the positive economic data are running out of China Engine stories.

Range bound markets will continue to frustrate the directional players even with jobs numbers.

Out Of Funds

Monthly domestic outflow trend from long term mutual funds starting 1/31/07 through 9/8/10. Last point -290 billion.

Real Estate Is A Drag

Markets stuck between the yes it is no it isn't double dip action. No one can underestimate the power and adaptability of trading markets over the last 30 years, but the markets may have finally run up against a bridge to far when considering the ongoing massive equity losses in real estate against most of the proclaimed opportunities provided by the overall correction. Revised lending rules and current corrections in equity balances on virtually all real estate sectors leave little room for any economic expansion. Muscling past property problems to this point has been difficult since interventions, such as the Fed's, applies its heavy lifting capabilities only to the lenders load.

If time can sort and correct the housing mess with sideways action, that would be grand. However, if the markets continue to decline through the fall and actually do double dip, all asset classes will turn negative. Even the wonders of gold will collapse as redemptions in all investment sectors meet growing cash demand sparked by deflation fears.

Creeping Me Out Man

Q UPP Index correcting as compared to the July posting Hopefuls Force Rally. Bulls are clearly on the run but one cannot help to notice the complete despair of every news outlet and their now constant coverage of each housing report. Too many bummers man.

The Bulls are insufferable during the good times and the Bears are such deep dark 'your mother hates you' folk that it is hard to enjoy a break in the market.

We are closer to value now but flash crash and other useless information creeping confidence.

Hedged Expectations

What will create a bubble in Treasuries? A hint is in an article from Market Watch about how hedge funds have been and are increasingly piling into the Treasury market. Those supposedly most adapt at determining opportunity in higher risk markets are settling for some degree of certainty do mainly to the horrible job they have done over the last three years and their clients insistence on no lock ups and some kind of a return.

New York Times has a piece regarding the continued difficulty in the mortgage market especially delinquencies in home equity loans. Apparently 11.1 billion in home equity loans has been written off and an additional 19.9 bill in home equity lines of credit has been swallowed by the banks. Wall Street continually pushes the notion the worst is over and share prices have already considered the bad news. But the need to have a reason to construct a bull scenario however is tough if general public obligations restrict sustained consumption in virtually all areas.

Two Treasury Secretaries Visionless

Previous Treasury Secretaries Rubin and O'Neill both stated in an interview broadcast today that another round of stimulus was unnecessary and ultimately the troubled economy would gradually become stronger on its own. Now this is not surprising since both have been proponents in the past of financial deregulation and a blind faith in the market's ability to figure things out, as it did when it figured out assets of almost every class were no good after deregulation allowed leveraging of worthless bundles of debt. Prudent financial stewardship will work, according to the two Secretaries, though neither could quite see the recovery horizon, or for that matter, see now much current market equity prices are supported by notions of future stimulus.

Without an additional dole, the road to recovery will be much longer than the two are predicting, especially if market players figure that being ahead of the investment curve is a sell and not a buy.

Hopefuls Force Rally

Updating the Upward Price Propensity Chart. The blue line measures the 2010 combined performance of the S&P and Nasdaq eminis as of today. The green line measure the validity of the rally.

Markets and economy need a rally badly to keep things together, but this looks like a bunch of forceful hopefuls.

Gaming Earnings

The largest gaming system on earth, earnings data, is being released for second quarter performances and once again analysts seem to be shy of reported results. Hard to believe these guys love being viewed as fools constantly but whip me must be their mantra.

INTC the other day and JPM today, have beat estimates. Now for the tech guys it really does not matter because as we know from stocks such as AAPL, another thirty ways to send your picture and download anything is supposed to be innovation. As for JPM, they are a classic example of how bad things really are when writing down bad debt and implementing weird accounting rules makes you a winner. They even have said they will buy back their own stock, which despite what any bull may tell you, is never bullish.

Now there may be some opportunities out there but think what got us here. Banks and investment firms went after the weakest, yet largest portion of the economy to offer cheap financing in order to reap huge transactional profits. Some firms such as Goldman even flipped on their clients by taking the other side of the debt structured products. Legal but not well played.

So the opportunities to create jobs by fostering investments in businesses had already taken a backseat to consumer and mortgage lending because the trade was quick. No one had to sit around waiting to see if the business investment worked, just lend the money and take the fee. Ultimately the debt loads imploded as did the trades connected to them and here we are, left with a soft economy where altered lending standards have dried up potential job creation and any peripheral growth, such as trading, is suffering.

Now there is always China. But you have to have faith that the spin on their story has more sucker time and that the real bad banking in a totalitarian country will not result in a headline one morning which drives the market into new lows.

Ignore Prechter and Economic History

I noticed today that the top two most emailed articles from the New York Times were, number one, an article about Robert Prechter, the Elliott Wave guy, and two, an article about a book titled This Time Is Different, written by two economic experts covering 800 hundred years of global booms and busts.

It is easy to gather from the popularity of these two articles just how preoccupied folks are with current market conditions, but more importantly, an attempt here by readers to learn if there is anything about current market conditions which might forecast what is ahead. The answer is no.

First of all, Robert Prechter has been around forever rolling his cycle map out in front of traders always predicting extremes, whether up or down, and rarely being right especially when factoring in any notions of timing. Now Bob is calling for the greatest of all market dives which will, and if any one survives, result in the greatest bottom in the history of, well, big bottoms. According to Bob, everyone should sell just about everything they own and run with only a can of tuna to the woods and wait for his signal. But since timing has never been one of Bob's big strengths, better just skip the nature part and rent a movie.

The other article is about a Harvard economist named Ken Rogoff and University of Maryland economist Carmen Reinhart who together have written a history covering 800 years of economic disasters where, some how, unbelievably to the two professors, each previous economic disaster was generally ignored by the next blow up participants and so on so on. That is insight. It may be news to these two authors that they have offered little in the way of any useful material to combat present economic woes and according to their own analysis, everyone will ignore their advise in the future anyway.

So do not listen to Prechter and ignore the history lesson. This market will be different and no one will know just when a solid bottom is in or when the next boom will bust. If you are a buy and hold investor, that model is broken and new investment alternatives will be delivered from Wall Street which will be just a lethal. Individuals and groups will now have a challenge to find investment management which utilises adaptive risk methodologies. Good luck.