No clue what a fundamental shift would be that would cause a reversal here, but this has never been so extended. Ever.
AAPL relative to SPX is trading above 3.5 standard deviations on a weekly timeframe. I looked back through the history and it has never been so extended relative to the rest of the market, even during the height of it's bull runs. To me, this triggers a red flag of expected reversal back to the mean, which would likely entail either a significant drop in AAPL or an enormous rally in SPX. Odds favor a single stock drop rather than instantaneous euphoria. As for the reason why? My guess is that this is partially a product of option market pinning in a technically weak market. The pinning keeps the markets elevated, but the overall market weakness means single stock names or sectors still can fall significantly, but this simply has the effect of pushing flows into single stock names, which typically favors the larger cap stocks. In this case, AAPL is acting as a safety trade magnet for all the flows coming from the market dispersion amidst pinning. Question is if this would potentially reverse once opex occurs, or if we would need to wait until after new years to see weakness in AAPL develop.
FWIW, I'm sure this is more extended if you look at other ratios such as AAPL compared to the Russel indexes or other various sectors.
AAPL relative to SPX is trading above 3.5 standard deviations on a weekly timeframe. I looked back through the history and it has never been so extended relative to the rest of the market, even during the height of it's bull runs. To me, this triggers a red flag of expected reversal back to the mean, which would likely entail either a significant drop in AAPL or an enormous rally in SPX. Odds favor a single stock drop rather than instantaneous euphoria. As for the reason why? My guess is that this is partially a product of option market pinning in a technically weak market. The pinning keeps the markets elevated, but the overall market weakness means single stock names or sectors still can fall significantly, but this simply has the effect of pushing flows into single stock names, which typically favors the larger cap stocks. In this case, AAPL is acting as a safety trade magnet for all the flows coming from the market dispersion amidst pinning. Question is if this would potentially reverse once opex occurs, or if we would need to wait until after new years to see weakness in AAPL develop.
FWIW, I'm sure this is more extended if you look at other ratios such as AAPL compared to the Russel indexes or other various sectors.