Taking a Bite at Apple

Your Bull Market Alert portfolio managed tremendous gains last week, even as investors left Wall Street early in the week to start their Thanksgiving holiday. Although volume was to the light side, most of your positions managed better-than-market gains.

The Dow Jones was up 3.35%, the S&P 500 advanced 3.62% and the NASDAQ jumped 3.99% as U.S. stocks had their biggest weekly gains since June. Global markets weren’t far behind with the MCSI Emerging Markets Index rising 3.02%.

Stratasys, Inc. (SSYS) rose 11.57%, and last week’s recommendation, HollyFrontier Corp. (HFC), climbed 6.86%. Credit card stocks also continue to outperform as Discover Financial Services (DFS) jumped 5.07%, and moved back to a BUY, as did the PowerShares Listed Private Equity (PSP) exchange-traded fund (ETF).

With your HollyFrontier Corp. (HFC) March $42.50 call options up, we already are off to a good start in this position. As always, I will watch it closely to seize upon any opportunity to lock in some big gains.

This week’s Bull Market Alert pick, Apple (AAPL), is a combined bet on a general market rebound; the positive impact of “Cyber Monday” on U.S. retail stocks; the company’s strong online presence; and a strong bounce in Apple stock itself.

First, let’s look at the state of the overall U.S. market. According to sentimentrader.com, over the past 20 years, the stretch from the day-prior-to Thanksgiving through the third day in December has been positive 17 out of 20 times (with one of those losses being negligible). Combine that with strong seasonality, along with the market coming out of a severely oversold condition, and odds are that you can expect a strong December.

Second, I expect U.S. retailers with a solid internet presence to perform very strongly moving into the Christmas season. The weak economy notwithstanding, ComScore expects online retail spending to rise 17 % to $43.4 billion. And although Apple is known for its slick brick-and-mortar experience, its retail website was the fifth-most visited on Black Friday. And U.S. retail e-commerce spending hit over $1 billion on Black Friday, an increase of 26% compared to the same day last year. Today, “Cyber Monday,” should be the heaviest online shopping day of the season with more than 129 million Americans planning to shop online and spend about $1.5 billion. And a lot of them will be spending their money on Apple products.

Third, Apple (AAPL), which accounts for 10% of the Nasdaq, has just endured its sharpest correction in several years. Although the stock has bounced from its bottom, it still remains 18% off its all-time high. Yet the fundamentals could scarcely be more compelling. As investment bank UBS points out, Apple stock is trading near its five-year lows for both its price-to-earnings (P/E) and enterprise value/free cash flow measures. That’s why UBS has a $780 price target on the stock — 36% above Friday’s closing price.

With the recent correction offering you a “second bite at the Apple” buy Apple (AAPL) at market today and place your initial stop at $500.00. For potentially even bigger gains, I recommend the February $600 calls (AAPL130216C00600000).

Portfolio Update

Bank of Ireland (IRE) rose 1.90% for the holiday-shortened, Thanksgiving week. The Fitch Ratings agency issued a press release early last week upgrading the outlook on five major Irish banks, including Bank of Ireland, from “Negative” to “Stable.” Ireland’s financial recovery continues to move in the right direction. IRE is a HOLD.

National Bank of Greece SA (NBG) jumped 16.24% over the past four trading days. NBG’s shareholders approved a takeover bid last Friday for its competitor Eurobank Ergasias SA. This friendly takeover would result in NBG becoming one of the largest banks in Southeast Europe. NBG is a HOLD.

Michael Kors Holdings Ltd. (KORS) rose 2.29% last week. Analyst firm Wedbush reported Friday that as many retailers were cutting prices going into the holiday season, KORS was increasing some of its pricing. Wedbush noted several KORS associates commenting on strong sales and no negative impact from price hikes. KORS is a HOLD.

Stratasys, Inc. (SSYS) jumped 11.57%. SSYS proved once again that any move to the 100-day moving average is a strong “Buy” signal. SSYS launched, once again, from its 100 MA last week, just as it has done several times over the past year. SSYS is a BUY.

United States Natural Gas Fund LP (UNG) added another 3.19% last week. Linking back-to-back winning weeks, UNG is on course to hit its previous $23.38 high from just a few weeks ago. UNG is a BUY.

PowerShares Listed Private Equity (PSP) gained 4.33% over the past four trading days. PSP took off from its 200-day moving average last week and continued all the way to its 50-day moving average to move to a BUY.

Discover Financial Services (DFS) rose 5.07%. Financial stocks had a winning week across the board last week as the top Democrats and Republicans made positive comments regarding the U. S. “Fiscal Cliff” just before leaving or the Thanksgiving holiday. DFS is scheduled to report earnings on Dec. 13. DFS moved above its 50-day moving average last week to return to a BUY.

HollyFrontier Corp. (HFC) jumped 6.86% for its first week in your portfolio. Not only did HFC continue its skyward ascension last week, but it managed to hit a new 52-week high, as well. Of the 19 FactSet analysts covering HFC, their collective rating for the stock is a ‘Buy’ — the highest rating. HFC pays a $0.20 dividend on Dec. 6. HFC is a BUY.