- The market's lack of conviction is perfectly captured by the movements in shares of Apple, CNBC's Jim Cramer says.
- Apple's market capitalization peaked at $1 trillion. On Monday, it dipped below $800 billion.
- Conflicting reports on the U.S. economy, U.S.-China trade relations and iPhone sales are testing investors' conviction in the stock and making its trading volatile, the "Mad Money" host says.
As investors try to square conflicting reports on the state of the U.S. economy and U.S.-China trade relations, the action in shares of Apple has become a microcosm of the broader stock market, CNBC's Jim Cramer said Monday.
"In a way, Apple's the perfect metaphor for this moment," Cramer said as stocks swung higher after a wild trading session. Shares of the iPhone maker traded lower intraday on worries that a legal move by Qualcomm would stymie Apple's sales in China, but managed to launch a small rebound into the close.
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Cramer, host of "Mad Money," argued that Apple's moves perfectly captured how flighty investors have become as they struggle to keep their conviction intact in this volatile market.
For example, Apple's stock dropped from $168 to $164 a share on the Qualcomm news. Then, on CNBC's "Halftime Report," all four panelists, including Cramer, said that Apple's shares had hit an interesting level to consider buying.
All of a sudden, "the stock turned on a dime, rallying $4 bucks from its lows while the show was on. Now, I've scoured the wires — nothing else happened during that period," Cramer said. "I think it's a sign, a sign that jittery, insecure, underconfident traders will take their cue from anything."
"Don't get me wrong, everyone on that panel is worth listening to," he continued. "But the action here is a sign that the market's become way too mercurial for many people."
Speaking more broadly, Cramer pointed to some intriguing patterns in the stock. Apple's shares peaked on Oct. 3 at $233, which amounted to a $1-trillion-plus market cap. On Monday, Apple's market cap dipped below $800 billion.
Oct. 3 happened to be the same day that Federal Reserve Chair Jerome Powell said that interest rates were "a long way" from neutral, which told Cramer that Powell was considering essentially sacrificing economic success for the sake of curbing inflation with a series of rate hikes.
"In retrospect, his statement was such a confidence buster that Oct. 3 may have marked the peak of the entire business cycle," Cramer said Monday.
The next day, Vice President Mike Pence gave a hardline speech on China at the Hudson Institute in which he cast the ongoing trade dispute as a way to curb China's geopolitical ambitions, signaling a split in the White House between those who genuinely want a better trade deal and those who want to dismantle China's position as a global superpower.
"Between Powell's comments and Pence's speech, Apple's stock got hit with a one-two punch that, frankly, until today, I [didn't] think it was going to recover from," Cramer said. "Even though the company reported a darned good quarter at the beginning of November, it hasn't been able to get much traction."
Also weighing on Apple's shares was the company's choice to stop breaking down the quarterly sales results for its individual products, a move that many on Wall Street assumed was a sign that iPhone sales were slowing.
"It's very hard to have conviction in Apple when there's so much uncertainty and the only thing we know for sure is that the company's not going to disclose the number of iPhones it sells. I'm even hearing people fret that Apple may pre-announce to the downside because the previous guidance was too bullish," he said.
And while Cramer stood by his longtime opinion that Apple creates "the finest consumer products in history," even he admitted that he didn't know what will happen with its stock, which is owned by his charitable trust.
"Right now, Apple, the stock, sells at a dramatic discount to the [average stock in] the ," he said. "Analyst after analyst has slashed their price targets."
That's because, just like with the rest of the market, "it's hard for anyone to have conviction when there's so much negativity," the "Mad Money" host concluded.
Shares of Apple ended the day up 0.66 percent at $169.60, rising slightly in after-hours trading.
Disclosure: Cramer's charitable trust owns shares of Apple.