AAPL Pullback

  • Posted: 14 February 2012 04:26 PM

    For all those thinking AAPL has moved too far, too fast, consider this:

    Fifteen trading days after Apple made its OCT earnings report, AAPL was trading with an ISM of 14.740, then finished the quarter with a high ISM of 15.58.

    Today, fifteen trading days since AAPL made its JAN earnings report, AAPL is trading with an ISM of 14.452 ($507.55).

    AAPL has another $40+ to go before we see a “pullback”, but by then we’ll be in the April earnings run up.

    edited to update today’s intraday high

    [ Edited: 14 February 2012 04:46 PM by Gregg Thurman ]

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    Posted: 14 February 2012 04:28 PM #1

    I’ve decided to “look past” any pullback with my core trading positions (although the Apr 12s I’m trying to buy are vulnerable since they they may well expire before the earnings release).

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    Posted: 14 February 2012 04:31 PM #2

    I am not so sure.  There is too much money to be made by pulling it back.  Weather it will start at 525 or 560 no one really knows.

    I just know it will happen and it will be timed with some other bad news market wide to ensure maximum damage.

    All I ask for is that I have cash ready to buy at a discount.

    I don’t sell and re-buy because it is much too risky.

         
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    Posted: 14 February 2012 04:32 PM #3

    Depends on the person.  The only real disadvantage to my approach is bad timing, commission costs, and short-term capital gains.

    But I like it because I can define my risk with every single trade.  The market mood varies and so does mine.  I can be out tomorrow, today, months from now.  With the bull call spread, it’s much more predictable and flexible.

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    Thanks, Steve.

         
  • Posted: 14 February 2012 04:48 PM #4

    omacvi - 14 February 2012 08:31 PM

    I am not so sure.  There is too much money to be made by pulling it back.  Weather it will start at 525 or 560 no one really knows.

    I just know it will happen and it will be timed with some other bad news market wide to ensure maximum damage.

    All I ask for is that I have cash ready to buy at a discount.

    I don’t sell and re-buy because it is much too risky.

    Where’s the damage?  Waiting for a pullback from $525 (or higher), when you can uy it today for $507, doesn’t sound like very much exposure.

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    Posted: 14 February 2012 04:50 PM #5

    Gregg Thurman - 14 February 2012 08:48 PM
    omacvi - 14 February 2012 08:31 PM

    I am not so sure.  There is too much money to be made by pulling it back.  Weather it will start at 525 or 560 no one really knows.

    I just know it will happen and it will be timed with some other bad news market wide to ensure maximum damage.

    All I ask for is that I have cash ready to buy at a discount.

    I don’t sell and re-buy because it is much too risky.

    Where’s the damage?  Waiting for a pullback from $525 (or higher), when you can uy it today for $507, doesn’t sound like very much exposure.

    Bingo

         
  • Posted: 14 February 2012 06:52 PM #6

    omacvi - 14 February 2012 08:50 PM
    Gregg Thurman - 14 February 2012 08:48 PM
    omacvi - 14 February 2012 08:31 PM

    I am not so sure.  There is too much money to be made by pulling it back.  Weather it will start at 525 or 560 no one really knows.

    I just know it will happen and it will be timed with some other bad news market wide to ensure maximum damage.

    All I ask for is that I have cash ready to buy at a discount.

    I don’t sell and re-buy because it is much too risky.

    Where’s the damage?  Waiting for a pullback from $525 (or higher), when you can uy it today for $507, doesn’t sound like very much exposure.

    Bingo


    AAPL up $5.00+ in the last 30 minutes of today’s trading.  Up another $2.00 After Hours.

    Last week investors could have bought AAPL for as little as $458.  That’s 10+% less than tomorrow’s price.  Two weeks ago the price was $445, and AAPL isn’t trading any differently than it did after OCT earnings.

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  • Posted: 14 February 2012 06:58 PM #7

    Greg, 
    Do you see a pullback back under 500 before April earnings?  Or is this rocket burning nitro?

         
  • Posted: 14 February 2012 07:16 PM #8

    Let the wiener run.  I am, and it takes some discipline smile

         
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    Posted: 14 February 2012 07:51 PM #9

    Gregg Thurman - 14 February 2012 08:26 PM

    For all those thinking AAPL has moved too far, too fast, consider this:

    Fifteen trading days after Apple made its OCT earnings report, AAPL was trading with an ISM of 14.740, then finished the quarter with a high ISM of 15.58.

    Today, fifteen trading days since AAPL made its JAN earnings report, AAPL is trading with an ISM of 14.452 ($507.55).

    AAPL has another $40+ to go before we see a “pullback”, but by then we’ll be in the April earnings run up.

    edited to update today’s intraday high

    I agree with what you are saying.  While we have been in a pro-longed period of PE compression, this may finally be ending.  Besides the focus on Steve Jobs, 2011 saw worries of Apple being too large of a market cap, unsustainable growth, and how historically other companies began to plateau once they get this large.  It seems in the past 2-3 weeks the market and analysts are seeing Apple in a new light.  I’ve never seen so many positive segments regarding Apple on CNBC as I’ve seen recently. 

    As Tim Cook said today, Apple is a unique company that can’t be replicated.  If the market is beginning to believe this, it is conceivable we could see the PE expand slightly.  The July - Sep 2011 quarter saw the low / high PE of 13.98 / 17.96.  Returning to this PE range would put Apple at $490.84 to $630.58. This doesn’t factor in the additional cash per share they have accumulated since the Jul-Sep quarter.

    Many are accustomed to the Apple move up and then pull-back.  The past couple of weeks has shown past trading patterns may be breaking down.  While I am still in the camp that a correction to some degree is coming, I have less confidence in this happening.  I hope it does as I would like a better entry point for my April spreads.

         
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    Posted: 14 February 2012 08:12 PM #10

    February OE max pain theory is utterly obliterated right now.  500?  Try 510.

    AAPL selling was pretty short-lived.  Anyone trying to drive AAPL down…pretty much failed.

    The trend continues to look like it’s up.  And the markets have yet to have a particularly awesome up day!

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 14 February 2012 09:57 PM #11

    Just wish it would “flatten” out just a bit! Still not “parabolic”,
    but I wouldn’t mind $2/day for awhile.

         
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    Posted: 14 February 2012 10:16 PM #12

    Mav - 15 February 2012 12:12 AM

    February OE max pain theory is utterly obliterated right now.  500?  Try 510.

    AAPL selling was pretty short-lived.  Anyone trying to drive AAPL down…pretty much failed.

    The trend continues to look like it’s up.  And the markets have yet to have a particularly awesome up day!

    Mav, you seem to have two personalities. And so does Mav.

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    Posted: 14 February 2012 10:26 PM #13

    mountainpeaks - 15 February 2012 01:57 AM

    Just wish it would “flatten” out just a bit! Still not “parabolic”,
    but I wouldn’t mind $2/day for awhile.

    What purpose would that serve?

    You want to make it while the getting’s good, and before we ever get into another Armageddon scenario again, like we had in late November.  Everything looks rosy right now, but it could turn in a couple of weeks, just like things went from so gloomy around Thanksgiving to “Happy Days are Here Again” just a few weeks later.  With Europe being what it is, or perhaps Israel taking out Iran, or a Black Swan event, crap could happen.

         
  • Posted: 14 February 2012 11:06 PM #14

    huskerrx - 14 February 2012 10:58 PM

    Greg, 
    Do you see a pullback back under 500 before April earnings?  Or is this rocket burning nitro?

    The crystal ball is getting overworked and tired.

    This is all based on historical same period trend averages.  Same period is defined as like Friday to Friday period from quarters where Apple exceeded earnings expectations.  The only thing different this year is that AAPL has been outperforming the trend by a factor of 2.

    For the remainder of this quarter (earnings to earnings) the trend indicates that there will be a very slight pullback next week (1.49% from this Friday’s intraday low).  After that the trend shows noting but blue skies all the way to April earnings.

    Be careful using this metric.  I have been very fortunate that I started tracking AAPL in this way a couple months ago, and that Apple cooperated with holy smokes earnings and guidance, at the same time that investor capital is being brought back from the bond market to equities.

    Do I see a pullback to under $500 between now and April earnings?  No.  But it wouldn’t be the first time that I was wrong.

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  • Posted: 14 February 2012 11:11 PM #15

    JDSoCal - 15 February 2012 02:16 AM
    Mav - 15 February 2012 12:12 AM

    February OE max pain theory is utterly obliterated right now.  500?  Try 510.

    AAPL selling was pretty short-lived.  Anyone trying to drive AAPL down…pretty much failed.

    The trend continues to look like it’s up.  And the markets have yet to have a particularly awesome up day!

    Mav, you seem to have two personalities. And so does Mav.

    LOL Awesomely funny.

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