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Apple Inc NASDAQ:AAPL, Google Inc NASDAQ:GOOG, Bank of America NYSE:BAC

Tax Selling Expected in AAPL, GOOG, BAC, and More

Often Investors sell their losing stocks at year end. But this year worries about the F-Cliff- and the possibility of higher taxes in Y 2013 could be incentive to sell Winners and Losers by 31 December.

The $600-B of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling appealing.

Tax selling are likely behind the down trend in the shares of Apple NASDAQ:AAPL I believe. The stock is down 20% in Bear Market territory on the Quarter, but remember it is still up about 32% on the year.

Last week Apple fell about 9%. The stock gained more than 25% a year for 4 year running, the capital gains now present a selling opportunity if the tax bill is going to rise sharply on a calendar change.

“Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year,” said on analyst I read.

There are lot of high-net-worth individuals who have stocks in taxable accounts, and that could be what is affecting stocks like Apple. If you look at the stocks that people have their largest gainers in, they seem to be under a bit more pressure here than normal in here.

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Looking this year’s Top 20 performers in the S&P 1500 index including large, small and mid-cap stocks, all but 4 have lost ground in the last 5 trading sessions. And, the rush to avoid higher taxes on portfolio gains could cause additional weakness. Institutional investors have been going to cash since the October highs in anticipation of a No Deal in DC on the budget.

The S&P 500 finished last week up only 0.1% after another week of trading largely tied to the F-Cliff stand-off news, which has pushed the market up and down depending on the media’s interpretation of the Pols public chatter.

This week’s US Federal Reserve meeting could offer relief if policymakers announce further plans to help the sagging US economy. The FMOC meets Tuesday and Wednesday. The policy statement is expected at about 12:30 p EST Wednesday after the conclusion of the last meeting this year.

Some are saying this weekend that the market is likely to see more profit-taking ahead of tax rates going up next year. Volume could increase as investors try to shift positions before year end, some analysts are saying. And, while most of that would be in stocks, some of the extra trading volume could spill over into options too.

Volatility could pick up as well, and some of that is already being seen in Apple shares. Keep your eyes on the VIX for clues.

The volatility in Apple has been very high while the market itself has been calm. I expect Apple’s volatility to carry over into the market volatility.

Shares of Apple registered their worst week since May 2010. The stock’s 50-Day Moving Average fell to 599.52, crossing its 200-Day Moving Average at 601.38, a technical sell signal.

As investors sell stocks to avoid higher taxes in Y 2013, companies continue to announce special and accelerated dividend payments before year end.

Among the latest, Expedia NASDAQ:EXPE announced a special dividend of 0.52 a share paying on 28 December.

The big sell-off in stocks following the US election on 6 November is for the most part related to tax selling, it hard to know how much more is coming.

Taking the contrarian POV there is a chance that the market could rally before year end

The market has held up pretty well in here and so with a bit of good news regarding the F-Cliff negotiations to ignite positive sentiment the market could turn and head North in to the New Year.