Forget Gold and Treasurys, Apple is the New Safe Haven
Growing fears of a Greek default sent both the S&P and Dow tumbling on Monday as investors fled the market with abandon.
However, on the very same day shares of Apple made another new high.
”Forget gold and Treasurys, the safe haven has become Apple,” says an enthusiastic Fast Money trader Pete Najarian.
Although Najarian is being dramatic to underscore the strength in the stock, if you look at the recent correlation between the tech titan and the S&P, you might honestly think it’s become a safe haven. There’s been a clear divergence – with the S&P tumbling as Apple climbs.
And according to Najarian it seems likely that even more money is about flow into this stock.
Looking at the weekly call options he sees strong volume in the 405, 410 and 415 calls. “That suggests options traders expect Apple to go higher very soon.”
And he doesn't think Apple is just a momentum trade. Najarian believes the fundamentals also support the thesis. “They own the tablet market. They own the phone market. And they’ve got all that cash,” he says. “All cylinders are firing.”
He goes on to say that JPMorgan has a $500 price target on the stock. “That’s not unreasonable,” he says. “Apple could trade $500 before the end of the year.”
Trader Steve Grasso agrees. “The trade is close your eyes and buy until that doesn’t work anymore.”
Trader JJ Kinahan is also very bullish. He suggests waiting for a pullback but tells us “Apple under $400 is attractive –as long as you’re able to hold for 6 months to a year.”
Only Trader Steve Cortes is bearish. He points to weakness in Asia as a sign that Apple’s outperformance is coming to an end. “Because it’s the growing market for tech and it’s where most of the products are produced, historically tech and Asia are highly correlated. And Asia has been trading very poorly.”
What do you think? We want to know!
TOPPING THE TAPE: NETFLIX
The traders were also watching the action in Netflix after the company announced it will rebrand its DVD-rental service as Qwikster.
We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.
-- Reed Hastings, Co-Founder and CEO, Netflix
What should you make of it?
Pete Najarian thinks the decision feels like a desperation move. "Maybe they’re going to split into separate companies," he says.
If that were to happen, trader Steve Grasso thinks the video streaming business is the only one that will survive. "As a result, a split won't create shareholder value," he says.
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Trader disclosure: On Sep 19, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
Kinahan is long Bank of America (BAC) through stock and options
Kinahan is long CBOE Volatility Index (VIX)
Kinahan is long Citigroup (C)
Kinahan is short S&P 500 through options
Cortez owns (SO)
Cortez is long Treasury Bonds
Cortez is short Gold
Cortes is short the Euro
Cortes is short the Australian Dollar
CNBC.com with wires.