Sorry to sound unhelpful, but I’ve got nothing much to add to what I’ve been saying since the iPhone launch, which is that you can’t time this stock as there’s too much bullshit wafting around (witness Friday’s rally to $144 on a disastrous day for the markets and this morning’s sell-off to $141 on a green open for the Nas right now).

You can’t get an edge here. Don’t get whipsawed. People with far more money than us, with far more important agendas, are doing their thing to try and get the stock to go where they want. Everyone’s trading AAPL trying to get the “mother of all shorts” or the “mother of all rallies” in a single day’s trading. You might get lucky, but chances are you’ll just get whipsawed by the hedgies.

This is a time for conviction swing trading/investing, not scalping, for smaller traders. Remember, the bears have been remarkably quiet since the iPhone. Are they waiting for a nose bleed rally to short into? Do they have a repeat of January 06 in mind (a canard if ever there was one, as AAPL reports after OE, not before, now, so the catalyst for a 100M share dump just isn’t there unless earnings disappoint)? Who the hell knows - I certainly don’t - but I do know that I don’t want to give up huge profits from this Spring’s ascent.

Answer this: if Apple reports 90c+ for Q3 and gives its usual conservative guidance, how much would you expect the stock to rally. 5%? 10%? Nothing? Do you see a decline?

If it reports sub-85c and gives conservative guidance, would you expect a sell-off? If so, how much? 5%? 10%? Have you gone back to see how much AAPL drops after earnings, on the days it does open down following earnings? What’s the risk/reward set-up here? How far can AAPL rally from $143 on a great report? $5? $10? More? What would it take to keep the stock up there afterwards given a whole 3 months remaining until Q4 with no “news” imminent beyond rumoured new iMacs and possibly an iPod - rumours now already baked into the stock?

Is the stock actually priced to perfection here? What are the immediate (and I mean very near term)  catalysts to drive it higher for the next few weeks, or months, given a good report, other than the usual raft of analysts’ upgrades that never seem to do any good post-earnings? Is the stock heading for a fall post-earnings no matter what it reports, given this run-up? What can management say during the conference call to allow analysts to issue FY08/09 earnings upgrades, given that we don’t think they’re going to admit to the revenue sharing arrangement with AT&T?

Will analysts do the maths on their own without being handed certainties on a plate by AAPL, or will we see yet more ignorance and stupidity on the street, as the blow-hards at Citigroup, JP Morgan et al begrudgingly upgrade their targets from $90 to, say $125 but call the stock overvalued?

$141 as I write.

All I’m really saying is that before you decide on your earnings trading strategy, you should ask yourself what news is needed to push the stock higher, or lower, and what the likelihood is of getting it, given what we know about Apple’s product cycles, conference call habits, and guidance.

Any comments?

When I re-started actively following the stock market in winter of 2005, AAPL would rise prior to earnings, only to fall the day after, and resume it’s rise shortly after. At the time it was analyst humbling iPod growth that kept pushing the stock higher.

This pattern was broken during the Intel-transition period, to earnings being a non-event, or rather, down and further down, during what I call the 2006 doldrums.

Could be that AAPl has reverted to the older pattern and will plunge after earnings, only to resume climbing shortly after.

As far as products are concerned, several of their lines are overdue for an update.  There is no way they will go into the christmas season without an ipod (whatever the form) and at least 1 computer update, probably the iMac, since it’s been a while for that system.

In addition, I’d expect an update to one of their other non-computer products, probably their monitor line, since it as well has been static for a while.

So there is a fair amount of good news going into the christmas season, but in terms of very short term, the only thing I know about is a rumor that the new ipods are getting announced on Aug 7th.

A great week to go fishing. There are two items of interest. Apple Earnings. Apple conference call is generally a waste of time as Oppenheimer, Cook et al just parrot the press release of quarterly results. Questions by analysts are not answered unless it is already in PR.

A more interesting conference call will be tomorrow with AT&T. They are not used to the SJ modus operandi and they could let something slip in the Q & A

[quote author=“cschneid”]So there is a fair amount of good news going into the christmas season, but in terms of very short term, the only thing I know about is a rumor that the new ipods are getting announced on Aug 7th.

Street’s attitude is that iPods are so last season, daahling .. its all about the iPhone, dontchynaknow? ... I doubt a new new 6G iPod will excite the Street much, even though it should do. Witness the effect of the new MacBook last May - the stock actually tanked on the release! It took until Q3 Mac sales (and Q4 to really confirm it) were reported before investors really “got” the fact that the new MacBook was a huge deal. I expect the release of a new iPod to be similarly received (not with a sell-off, just a lack of excitement).

I think one of the problems I see is that the Street doesn’t know what to key off any more. Apple was, they thought, a simple story… it was about iPods. Then they got a clue that Mac sales were important too. Now they think its all and only about the iPhone, but in reality, they just don’t know what the hell to think any more, and that’s what has me concerned. There’s no consensus on what metric to use to judge the earnings report by. Simply delivering stunning EPS growth isn’t enough.. these guys want unit sales numbers to beat some unknown “whisper” number.

I think the Street is very confused, and it has me worried that if they don’t understand the earnings report, they’ll just sell it. To “understand” the report, Apple needs to give them something about which they can yell “EUREKA!” even though they don’t know what it means .. in other words, we need a big headline grabbing figure, such as “over 1M iPhones sold to-date,” or “Mac sales were over 1.8M last quarter,” or even the old faithful “iPod sales topped 10M for the quarter.”

Or the Holy Grail of statements, “our revenue sharing arrangements with AT&T remain confidential” which would at least confirm there is such an arrangement, and permit all the analysts - not just Piper Jaffray - to begin modelling such an arrangement into their longer-term forecasts. Hopefully AT&T will spill some beans tomorrow when they announce earnings in the morning.

Would you agree that Monday and Tuesday’s price action will give us “little guys” more guidance in terms of holding or selling through earnings?  If aapl has a nice rise the next two days (starting this afternoon) then the odds or more upward price movement would be limited and people would be more willing to sell to book some profits short term.  This is definately a tough call.  We have all experienced a nice boost to our portfolio.  Should people sell and miss a big jump when aapl reports there would be somewhat of a pullback as there always is.  We also need to remember that there is a lot of long term play with this stock so should someone miss an upward spike there should be many, many more to come over the years.  Right now my portfolio (entire portfolio) is up 95% and it’s only July.  I’m on the fence but as I type and read AFB posts I am leanning more towards selling prior to earnings.  I come back to the first sentence in this post, for me a lot depends on what aapl does the next day and a half.  No one ever said making money was easy and trading aapl or any stock for that matter is no different.

Tommo - I had convictions on my last post and now you made me rethink things.  The chance of strong iphone unit sales over launch weekend, mac sales and revenue sharing are huge unknowns but ones we all feel have a better chance of beating current analyst estimates.  I’m confused again!!!

[quote author=“runedge”]Tommo - I had convictions on my last post and now you made me rethink things.  The chance of strong iphone unit sales over launch weekend, mac sales and revenue sharing are huge unknowns but ones we all feel have a better chance of beating current analyst estimates.  I’m confused again!!!

Good - glad it made you think .. that’s the point of this thread, not to say its time to buy or sell, but just to encourage everyone to try and expand their perspectives a bit and play devil’s advocate for themselves. I am not advocating lightening up here - nor am I saying its a great time to buy. I’m just trying to point out some of the dynamics behind the way the stock is trading right now, and factors which could influence it over the next few days.

I will be waiting for AT&T’s report tomorrow morning with intense anticipation, as will every other AAPL investor. If they either confirm 1M+ iPhones, or more importantly confirm there is a subscriber revenue sharing arrangement, AAPL should pop big.

[quote author=“Tommo_UK”]

Any comments?

Grate grate writing Tommo. And a pleasurable reading.

I am an total idiot in the art of day trading. But your considerations are actually very similar to mine. I just could however never have described them so well as you do. 

Comments ?
It will be the AAPL Darling Doll bra size that will drive the stock until mid-September. Any downturns will be met as an buying opportunity because the D-cup bra will stare them in the face during sleep - and wake. Then the so called “rational-expectations” (hand washing, - “the figures where there when I looked - even on the Prints!”) from new iPods will begin to hit the upper-guts of all “modern thinking” investors.  This will then hump and bump like a frog into the 2008 at $180-$200. From then on, we should see a greater consensus as there will be more and “better” iPhone figures on the table.

But in the whole, for coming years, I feel this will be like the MSFT climbing in the old days. Analysts screaming, overvalued, not sustainable, this and that, every day. As if any analyst could have foreseen the fortunes of MSFT in the years of 1990-1999. They had no idea and they where consequently more wrong than right. But the stock made it because of the Dolls Bra size. They couldn’t afford to not. But with humps & bumps, grrrrs and whoops.   

It’s raining !

Xumbra, so this is all about jumping frogs and dolls with big breasts and oversized bras? Hmm.. I’d never thought about it that way before

[quote author=“Tommo_UK”]

I think the Street is very confused, and it has me worried that if they don’t understand the earnings report, they’ll just sell it. To “understand” the report, Apple needs to give them something about which they can yell “EUREKA!” even though they don’t know what it means .. in other words, we need a big headline grabbing figure, such as “over 1M iPhones sold to-date,” or “Mac sales were over 1.8M last quarter,” or even the old faithful “iPod sales topped 10M for the quarter.”

.

Screw the Street. They do not invest. They churn, rollover, advise, run hedge funds and influence the gullible little guys in the market. The successful Mutual funds that Morningstar tracks has some smart guys that do not telegraph their intentions about a particular stock. This is sometimes called the smart money and they buy and hold. They sell if they perceive a major change company operations. No one of any consequence is selling Apple. As far as day trading or swing trading it looks like fun but I want to make money so I rarely try it.

[quote author=“SNIPUS”]As far as day trading or swing trading it looks like fun but I want to make money so I rarely try it.

/cough cough/ didn’t you buy a load of Julys very recently to trade into earnings? /cough cough/ 

On a serious note though, remember this topic is about “trading” into earnings, and is really aimed at people who are intent on trying to game the immediate moves into and after the report. I agree with the sentiment in your post above wholeheartedly otherwise.

One important thing to consider regarding trading through earnings is the fact that the level of FUD and manipulation has certainly fallen from it’s ridiculously high levels.  Someone (I thought it was Tommo) is credited with saying they felt the manipulating hedgies have moved on from aapl (not completely moved but have started that trend).  If that is the case then holding aapl through Wed. would make sense.

IMHO, I feel AAPL is a bit overbought at present.  Assuming that AAPL declares Q2 profit of $1.00 ps (optimistic) , that puts the ttm P/E at 40 with the pps at $145 which we are almost at now.

I’m not a trader but a long term investor.  What I do know (i think anyway ) is:

Is APPL going higher long term ... YES

Will the growth rate beat the market ... YES

Will growth continue at a good pace ... YES.

This is enough for me.  I’ll ride out the inevitable dip between now and years end.  I would predict a pps of $160-170 by end of CY2007.  That’s fine with me!  Damn the torpedoes ... full steam ahead.

My $0.02 anyway.

[quote author=“Tommo_UK”][quote author=“SNIPUS”]As far as day trading or swing trading it looks like fun but I want to make money so I rarely try it.

/cough cough/ didn’t you buy a load of Julys very recently to trade into earnings? /cough cough/ 

On a serious note though, remember this topic is about “trading” into earnings, and is really aimed at people who are intent on trying to game the immediate moves into and after the report. I agree with the sentiment in your post above wholeheartedly otherwise.

‘‘rarely’’ ... yes and sold thurs at a small loss , took proceeds
bot Aug 140’s and sold them near the close on Friday for a substantial gain….

but back on topic… fooling around in this atmosphere is coin flipping as it seem impossible to predict the short term price of AAPL. It could go 10 to 15 dollars in either direction. Cannot get rich by coin flipping. If I was 75 percent in I would feel comfortable short term. If it breaks out on news I could go all in at a higher price . If it drops 10 dollars on FUD or whatever I could go all in…. and then STAY IN.

There will be no deflationary pressure in the the overall expectations.  Just Wonder-bras © - iPods, Leopards, iPhones, “blow you away” one more things - - and - -  Apple just announced figures for the the Q1 . . . . . . buy buy buy.