Be Safe & Open Minded

  • Posted: 27 October 2009 06:00 PM

    How is everyone doing?  Long time to no see.  There’s a massive amount of bullishness in Apple right now.  I just wanted to congratulate everyone who held strong, and ignored all nonsense about Apple going to $60 horse shit.  We’re finally here at $200 a share.  However, tread very carefully over the next few weeks because the DJIA & SP500 is on an 8 month rising wedge pattern.  Very bearish.  The markets can definitely go against the trend, but its still worth being very careful.  If you’re holding options, you might want to consider selling those options and then buying shares or maybe even scale back a little bit.  If the SP breaks out of its rising wedge to the upside, then everything is honkey dory.  However, if you see it break to the down side, the only point of resistance is the 200 moving average.  I know everyone on this bored has seen much worse.  But a break on the SP can easily push Apple down to an absolute low of about $140.  So tread carefully and happy trading.  Also, watch it the next few days because it really needs to close above $200 several days in a row and buyers need to be comfortable buying and holding above $200.  Apple dipping below $200 is not terrible.  But its certainly not great either.  Remember, Apple is at the whim of the market and you can see all these bullish analysts go bearish on the drop of dime and the media can turn against Apple as well.  Nothing has changed for Apple since it was at $80 a share.  Its the same company with a different market complection or sentiment.  That sentiment, however, can turn any time against Apple.  No matter how irrational.  Remember Ambramsky’s $70 price target?  That imbecile now has a what?  $200+ price target.  And nothing has changed.  He’s just behind the curve.  The analysts are catching up, and the amount of bullishness in the stock actually concerns me.  Happy trading (or investing) and be safe!

         
  • Posted: 28 October 2009 12:10 AM #1

    andyzaky - 27 October 2009 09:00 PM

    How is everyone doing?  Long time to no see.  There’s a massive amount of bullishness in Apple right now.  I just wanted to congratulate everyone who held strong, and ignored all nonsense about Apple going to $60 horse shit.  We’re finally here at $200 a share.  However, tread very carefully over the next few weeks because the DJIA & SP500 is on an 8 month rising wedge pattern.  Very bearish.  The markets can definitely go against the trend, but its still worth being very careful.  If you’re holding options, you might want to consider selling those options and then buying shares or maybe even scale back a little bit.  If the SP breaks out of its rising wedge to the upside, then everything is honkey dory.  However, if you see it break to the down side, the only point of resistance is the 200 moving average.  I know everyone on this bored has seen much worse.  But a break on the SP can easily push Apple down to an absolute low of about $140.  So tread carefully and happy trading.  Also, watch it the next few days because it really needs to close above $200 several days in a row and buyers need to be comfortable buying and holding above $200.  Apple dipping below $200 is not terrible.  But its certainly not great either.  Remember, Apple is at the whim of the market and you can see all these bullish analysts go bearish on the drop of dime and the media can turn against Apple as well.  Nothing has changed for Apple since it was at $80 a share.  Its the same company with a different market complection or sentiment.  That sentiment, however, can turn any time against Apple.  No matter how irrational.  Remember Ambramsky’s $70 price target?  That imbecile now has a what?  $200+ price target.  And nothing has changed.  He’s just behind the curve.  The analysts are catching up, and the amount of bullishness in the stock actually concerns me.  Happy trading (or investing) and be safe!

    Nice to hear from you, Andy.  Your comments on both the analysts and current sentiment are cogent, and I share your concern regarding the risk level.

    I don’t know much about rising wedges.  Are you looking at the daily or weekly chart?

    My own weekly S&P500; chart does show us to be on uncertain ground.  The RSI(14) for example is right at the uptrend line tracing back to March.  Sentiment is overbought and the MACD histogram continues to diverge.

         
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    Posted: 28 October 2009 12:34 AM #2

    Here is a rising bearish wedge for the Dow from Barry Ritholtz’s The Big Picture

    Ooh ... Look at me ... I are a technician smile  j/k

    [ Edited: 28 October 2009 12:40 AM by stkstalker ]

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    Posted: 28 October 2009 01:06 AM #3

    I’m assuming the Q4 is soft and that we sell the stuffings out of everything in January and February.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
  • Posted: 28 October 2009 01:07 AM #4

    andyzaky, good to see you back in the AFB!

    As an investor (not a trader), I’m not worried about a short-term move down on AAPL. I share your concerns about holding $200 in the short run, but I expect AAPL to shoot up like a rocket over the next several months. I have a $300 per share 12-month price target at the moment (thanks in part to your good numbers).

    Today’s volatility demonstrates what happens when we all sit around trying to gauge the mood of consumers and whether or not consumers will return to binge spending by Christmas. I expect a respectable holiday sales season (all things considered) with retailers pushing discounted product early in the season to entice shoppers into the stores. I don’t expect a return to high margin mass consumer sales by December and for retailers to be cautious on inventory purchases due to uncertainty about the economy and consumer sentiment. The big box boys should do well.

    Apple will do extraordinarily well at retail this year with noteworthy increases over last year’s retail performance due to much higher perception of Apple products as a value proposition. I’m writing this lengthy post because Apple is now one of the nation’s largest specialty retail chains and I expect this holiday season’s retail results to shock the industry and more than surprise analysts. It’s one of the reasons I’m looking for 3 million Mac units if Apple can keep the new iMacs in supply.

    My prognostications:

    Due to the challenging economy and despite Microsoft’s best efforts, Windows 7 will not be able to hold steady retail PC prices.

    Apple retail stores will see much more than modest increases in store traffic and sales per square foot this holiday season over last year. The 3GS iPhone, the iPod touch and the iPod as contemporary gift-giving staples will be the draw. The new iMacs and the updated laptop line will continue to sell themselves. 

    Back to the point: We could see real volatility in AAPL over the next couple/few weeks. But as retail reconnaissance and anecdotal shipment and sales reports make their way through the market, AAPL should be a 4th calendar quarter standout due to contrasting conditions elsewhere.

    As the economy moves in recovery mode, we will see consumers returning to stores with both value and quality in mind.

         
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    Posted: 28 October 2009 03:59 AM #5

    Volatility is basically ever-present with Apple—it’s one of the things investors really must know about the stock.  But my hazy crystal ball tells me it’s extremely doubtful that Apple will, at its current pace, be dragged down anywhere _near_ its lows from this year.

    People are starting to figure out that Apple can do just fine without Steve Jobs, and Apple is well-positioned to continue delivering standout financial results with standout gross margins despite the economic climate.  All of the recent quarterly reports speak for themselves.  Then there’s the accounting rule changes that will make Apple’s true-if-non-GAAP revenues (almost $43 billion in FY 2009!) and earnings crystal clear.

    Unless the economic indicators start nosediving south (or there’s some of the possible negative news or rumors, etc.), I think AAPL the stock should do just fine (though the ride will be bumpy like always), and its Q1 2010 numbers will not disappoint.

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  • Posted: 28 October 2009 04:39 AM #6

    Great to hear from you Andy! We missed you around earnings season with our “big 3” being reduced to only the “big 1”. Hey Turley, are you out there too?

    It always useful to hear a cautious word too. The discussions here that are most useful (in my mind anyway) are the ones where we question our bullishness and talk of potential downsides vs the ones where we tend to only pat each other on the back for sharing the same targets and ideas. I will admit that my trading position today is light on Apple and for the first time in a very long time I’ve actually made a small reduction in Apple in my core position. The fact I’m uncertain of the next few weeks and since I’m north of the border the value of the American vs Canadian dollar is a factor for me as well.

    Were you pleased to see the accounting rule change? You were always very vocal on this, or do you now think with a full pipeline of contributions this doesn’t matter as much these days?

         
  • Posted: 28 October 2009 12:23 PM #7

    I am have been, and will be in Apple for the long-term. I think fundamentals, company strategy and competitive position are very attractive, but I think AAPL will probably pull back some. Everyone turned bullish leaving few bears to convert, thus there is a large supply of bulls that could turn on a dime. I have sold a tad of AAPL recently, but wouldn’t sell here cause I think price is too low. I wouldn’t add more, because the price is too high. If AAPL pulls back a ways, I’m gonna break out the spoon and dig in. I know the stock will hit 300, but I have no idea when, I can’t predict short-term moves and sentiment, I can only hope to take advantage of it.

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  • Posted: 30 October 2009 01:08 AM #8

    andyzaky - 27 October 2009 09:00 PM

    The analysts are catching up, and the amount of bullishness in the stock actually concerns me.  Happy trading (or investing) and be safe!

    Thanks for your well-time called for the traders among our lot. I’m not concerned about the sudden drop over the past few days and maintain a $300 per share 12-month target. However (as you point out!) the short-term volatility can be treacherous for highly leveraged traders.