Head Fake or Market Bottom? Fear Overcomes Greed Among AAPL Investors

What a roller coaster ride! The Nasdaq was down 137 points this morning only to bounce off its low for 2000 to go positive by 13 points in the early afternoon, then the index dived back lower by 85, then came back again, but couldnit escape a river of red by the sessionis end. Appleis stock continues to probe deeper down the river Styx.

Tonight the Presidential candidates engage in a second debate. CNBC reported this morning that a survey of US fund managers revealed 62% believe Al Gore will win in November, up from only 7% in August. The real question for the financial markets is will the Republicans remain in control of Congress? The conventional wisdom is that one party control of the House of Representatives and the Presidency would be a negative for the economy.

Yahoo! (YHOO) fell 17.94 to close at 64.75, after yesterdayis analyst meeting where the company noted the Internet environment is increasingly a difficult one in which to turn a profit. Cisco (CSCO) remained unchanged at 51.19. But traders worry that if the stock falls below $50, it will trigger a tidal wave of margin selling. Lucent (LU) lost 10.31 to 21.25 after missing earning which had already been lowered twice before.

Appleis stock sank 1 5/8 or 5.99% to close at 19 5/8 on amazing volume of 21 million shares trading hands.

A C/Net article notes that a carbonized version of MS Office wonit be ready to ship in time for the release of Mac OS X early next year. "Without a Mac OS X version of Office, which is the major productivity suite for the Mac, Apple could face problems moving customers to its new operating system, analysts say. In addition, they warn, the migration to a new operating system is a critical time for any software company." Software company? Hmmm.

MacWeek naively explained away AAPLis recent fall in price per share by exclaiming, "...Wall Street hates Apple". Hello? Wall Street must "hate" Intel too, the semiconductor giantis stock has taken more than a 50% cut in price since the beginning of September. Thatis a loss of $251 billion in market capitalization, dwarfing the roughly $8 billion in market cap shed by Apple in the same period. But, Intelis CEO, Craig Barrett has a more rational explanation claiming, "I donit know what to call that other than an overreaction."

The Nasdaq fell 72 points (-2.22%) to close at 3168 on volume of 2.3 billion shares. Today was the fourth heaviest trading day in Nasdaq history and only the second time this year the Nasdaq has closed below 3200. The Nasdaq is down 22% year- to-date.

The important number to watch is 3164, the closing low for the Nasdaq in 2000 set back in May. If the Nasdaq falls below this level more downside risk is in the forecast. On the other hand, if the Nasdaq remains above this level, the index could make a heartening comeback in the fourth quarter. In some ways thatis like saying if the market goes up, thatis good, if it goes down, thatis bad. But itis all we have to go on today.

The Dow fell 110 points (-1.05%) to close at 10413 on volume of 1.3 billion shares. Arthur Cashin of PaineWebber noted he canit remember a single instance of a selling climax occurring on Wednesday. October is a superstitious month on the NYSE. Many traders donit expect the true bottom to occur this early in the month.

The S&P 500 dropped 22.43 points (-1.62%) to close at 1364.59.

The S&P 500 put to call ratio, at four puts to every one call, has hit an unusual extreme. There are $18 going into puts to every $1 going into calls. Put options are contracts that allow the purchaser to sell a specific number of shares at a certain price by a certain date. Call options are the opposite of puts, they allow the purchaser to buy a stock at a certain price in the future. A high ratio of puts to calls means that most investors expect the stock market to wilt further. But hereis the kicker: At any one moment in the stock market most investors are wrong. So a high put to call ratio is a "contrarian" indicator, characteristic of market correction lows.

In Apple related businesses: Akamai bounced 3 13/16 to 45 9/16. Adobe gained 7 dollars to 150 11/16. Earthlink fell 11/16 to 7 3/16.

Motorola got slammed for 4 3/4 or -18% to 21 1/2. Investors dumped the stock after the company warned of slowing growth in cell phone sales next year and noted the weak euro is hurting profits. Yesterday, Motorola reported Q3 earnings in line with estimates at $598 million, or $0.26 per share, compared with $361 million, or $0.16 a share, a year earlier.

IBM lost 2 1/16 to 112 13/16. A rumor that IBM canit keep up with the demand for chips from Cisco hit the stock.

Appleis competitors: Wall Street must hate Dell too, the stock lost 1 1/4 for a two-year low of 23 dollars. Gateway was lower by 1.29 to 44.62. Gatewayis 52-week low is $43.

Compaq gave back 0.06 to 24.19. The Houston, Texas based computer manufacturer said it will sell new Presario PCs equipped with Net2Phoneis Yap phone. Bloomberg reported, "The agreement with Net2Phone enables Compaq customers to get up to 1,500 free domestic-calling minutes on PC-to-PC calls...The Yap phone, which plugs into a port on the back of the PC, also allows a person to listen to audio files over the Internet."

Shares of Microsoft were "loved" by Wall Street today, rising 1 3/16 to 55 3/4. Hewlett Packard lost 3 7/8 to 85 9/16. Intel fell 2 3/16 to 35 3/8.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Appleis stock activity, visit our Apple Stock Watch Special Report.