Apple and Yahoo! Moving in Opposite Directions (Again)

Over the years it has not been difficult to find charts in which Apple (AAPL) and Yahoo! (YHOO) have been moving in opposite directions. In fact, just make a chart of any random time frame and it’s a good bet that AAPL will be rising and YHOO will be falling.

For the last three months, however, that relationship has been reversed and it has been YHOO stock that has been on the rise, while AAPL’s fortunes have been on the wane, as the chart below reflects.

[source(s): StockCharts.com]

Part of the resurgence in YHOO is no doubt due to Marissa Mayer, the new CEO, who has already begun to put her stamp on the company and has given analysts and customers something to talk about. In fact, I searched the blog and it turns out that the company has not warranted a reference here since 2008, seemingly ready to go the way of AltaVista.

Pairs trades in the technology sector can be a rocky ride, but for those who are willing to be long YHOO and short AAPL, the potential for a big winner continues through today’s trading.

Related posts:

• A Brief History of Apple Earnings, in Pictures
• The Case for Selling Apple Puts
• Apple Products vs. Platform
• Looks Like Apple VIX (VXAPL) Futures Are Coming Soon
• Pairs Trading with ROB
• The VIX-VXX Minotaur Trade

Disclosure(s): long YHOO and short AAPL at time of writing

optionsXpress Trading Patterns and the VIX

One of the trading tools that satisfies my inner investment voyeur is the Trading Patterns feature at optionsXpress. If the “Trading Patterns” name doesn’t ring a bell, you might also know this feature as “People Trading ___ Also Traded…” in the spirit of Amazon’s recommendation technology and predecessor technology that dates back to internet pioneer Firefly Network Inc.

In the past, I have used the Trading Patterns data to see which companies were being most actively traded by those who are seeking high risk speculative momentum plays. I somewhat arbitrarily made BIDU the poster child for these momentum chasers and have twice looked at what those who were playing with BIDU were also trading.

With all the discussion around potential substitutes for the VIX at least as a hedging tool, I thought it might be interesting to get a broader picture of those who trade VIX options. Thanks to Trading Patterns, I have captured just such a snapshot below. Not surprisingly, VIX traders are aggressive risk takers. In aggregate, they appear to be hoarding gold (GLD) and going short with the double inverse ETFs for real estate (SRS) and the NASDAQ-100 index (QID). It’s just a guess about the direction of some holdings, but the other positions appear to fall squarely in the short finance and technology camp: SPY, WB, AAPL, YHOO, and NVDA. The one finding that I see as somewhat surprising is the presence of the ProShares Ultrashort Oil & Gas ETF (DUG). Given the list of trading vehicles, I am concluding that the VIX players see oil and gas as overbought instead of a safe haven like gold. In any event, it is clear that the pessimism of VIX traders continues to be grounded in an expansion of the real estate and financial woes, the expectation that this will drag technology down with it, and the opinion that gold is the most sensible long position at the moment.