Monday, January 31, 2011

Mild Monday

So far, so mild. Good sleeping weather here, 65 degrees and blue skies. Even with an early (for me) bedtime, I missed the first three hours of the market. Egpyt? Bah. No biggie, says the market. Global selloff to start the week? The Dow, S&P and Nasdaq didn't blink. All three are fractionally up.

AAPL has made a run in the past hour or so from 334 to 339, a pleasant surprise. I got out last week, so I'm just waiting for a re-entry point. It appears 334-335 is new support.

As for VXX, I got out with a tiny loss in the mid-31 area. It's so typical of me to have such a modest position and yet all I could think of for most of the weekend was Egypt and VXX. The market often thinks one or two steps ahead. Unless that situation erupts into a shutdown of the Suez Canal, the street gatherings and protests are built into the US market already.

I was expecting a red day, but AAPL, BIDU, FAS, GLD, IBM, TBT are green. NFLX is finally selling off, down 1.8% (214). F is down 1.2% (16.06). GOOG and AMZN down slightly. LULU also. TVIX, which was up more than 20% on Friday, is down 2.4%, so net-net, it's still up big the past two days. I'm staying out of that, VXX and most everything else. The only issues I'll touch are AAPL and maybe GLD and VXX.

Sunday, January 30, 2011

Apple evangelists vs. heretics, Jan. 31

Adds a bearish update from chartist ZenPenny.com to the heretics list. 

Heretics
• Zenpenny.com, January 30, 2011
http://www.zenpenny.com/wp-content/uploads/2011/01/AAPL-1-30-11.gif
"The pattern here is the market beginning the shaking. It will get more severe than this before all is said and done." 

• Zenpenny.com, January 25, 2011
http://www.zenpenny.com/wp-content/uploads/2011/01/AAPL-1-25-11.gif
"Typically, when patterns like this occur after a large run like AAPL has had, they are reversal patterns or at the very least, the beginnings of a consolidation."


Evangelists
• Jon Najarian, Optionmonster, January 25, 2011
http://twitter.com/#!/optionmonster/status/29929259619328000
"ya think ;-) RT @lenk_ Thats right. NFC going to be big. And if you mention it on CNBC, every grandma is going to know about it."

http://twitter.com/#!/optionmonster/status/29930790875828224
"bottom line: Gets $AAPL in payment stream, bad for $V, $DFS, $MA, $AXP, $COF RT"

• Ray Merola, January 25, 2011
http://seekingalpha.com/article/248380-apple-a-sound-value-stock-for-conservative-investors?source=yahoo
"Using a 19X multiple, not much different than today's, I get a target price of $437 per share. Note that this multiple is less than the expected EPS growth rate for the upcoming one, two and five year periods. It's also less than the trailing five-year average multiple. The stock price today is about $335 a share. Therefore, this price target represents potential one-year upside of 30 percent."

• Gleacher & Co., January 19, 2011
http://www.streetinsider.com/Analyst+Comments/Gleacher+%26+Co.+Maintains+a+Buy+on+Apple+(AAPL)%3B+Margin+Structure+Headed+North+Once+Again...Target+to+$400/6223177.html
Buy rating maintained
New target: $400 (raised by 50)

• Dennis Hildebrand, Apple's Gold, January 18, 2011
http://dennyhil.blogspot.com/2011/01/q1-2011-actuals-my-grades-and-beyond.html
"I'm convinced that leadership is solid, even when Jobs retires, or backs away — Long term, this company is in great shape and I still believe that Apple will hit 590 by mid 2012. ... I'm holding my shares, I'm going to enjoy the ride all the way to 800."

• Brian White, Ticonderoga Securities, January 18, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Maintained "buy" rating
Target: $550 (raised by 100)

• Gene Munster, Piper Jaffray, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Target: $483 (increased by $45)

• Jeffries, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Merrill Lynch/Bank of America, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Goldman Sachs, Still on Conviction Buy List, January 18, 2011
http://www.marketfolly.com/2011/01/goldman-sachs-note-on-steve-jobs-apple.html
Goldman's 12-month price target on shares of AAPL is $430.

• Citigroup, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $415

• Morgan Stanley, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $410

• James Altucher, author/investor, January 18, 2011
http://www.jamesaltucher.com/2010/12/the-one-reason-apple-will-be-the-first-trillion-dollar-market-cap-company/
"I'm still convinced the fundamentals are there to make $AAPL the first trillion dollar company." (StockTwits.com)

• Maynard Um, UBS, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Revised iPad sales estimates from 5.5 million to 6 million.

• Michael Shulman, Short Side Trader, January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The company is on a roll, doubling in revenues during the Great Recession and Jobs' views are deeply embedded in the corporate culture."

• Jason Schwarz, Economic Weather Station
January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The problem with selling because of the health of Steve Jobs is that his premium is not even priced into the stock. If it were, AAPL would be at $750 a share. This stock TRADES on Steve Jobs, but it is not PRICED for Steve Jobs."
January 20, 2011
http://seekingalpha.com/article/247542-apple-s-secret-ingredient-involves-more-than-just-steve-jobs
"Any selloff that we see over the next month is the result of normal Apple trading patterns and should not be confused with any kind of long term change in investor sentiment."

• Jerry Jordan, Hellman, Jordan Management Co., January 19, 2011
http://www.djnewsplus.com:80/login?URI=/article/0,,SB129538744009510614,00.html?mod=article-outset-box
"Arguably, there isn't a Steve Jobs premium," said Jordan, who said Apple shares are cheap and bought some earlier in the day.

Agnostics
• Moises Levi, January 26, 2011
http://gicharts.blogspot.com/2011/01/apple-inc-aapl-chart-analysis.html
"Yes, buy on the dip did work. Focus still on that broken trend, and the volume warning. Was the good news priced in? Sell trigger is clear. It's not your typical up trend. It will start to be more volatile. AAPL probably needs a long stable channel pattern."

Saturday, January 29, 2011

What do I know?

When Mubarak announced his decision yesterday to fire his entire staff, I figured that would placate Egypt's protestors until Monday. Instead, the death count has risen from 10 to 102 in little more than 24 hours. Fact is, the military has been very gentle with the general public; the latter wants the police deposed, not the army, and not just Mubarak.

After spending the day working and away from computers, this is stunning news. I underestimated the rage in Cairo. Maybe it's a setup, the police's disappearing act.

Update, Sunday, 4:08 am. Incredible, the rolling list of news coming through Google search right now. New story shows up every 2-3 seconds. Murabak's army jets are screaming lower and lower to the square where protestors have gathered in the thousands. Reports of army trucks nearing the square, too.

Friday, January 28, 2011

Weekend reading

Jeff Yang: How Steve Jobs 'out-Japanned' Japan
Philip Elmer-DeWitt: The iPhone as Barbie Doll

BBC reporter: 'This is how they treat journalists'

What the world respects is one's willingness to fight back. Things get worse, as a result, before they get better. But people can only take so much crap. When the price of bread rises to ridiculous proportions, shit happens. Obama warned the government, but they wouldn't listen.









Fuzzy Friday

AAPL opened to the upside, then cratered to no surprise. A pullback has been due for some time, and that last two sessions were opportunity to get out above 343. The drop after the open was drastic, but most longs aren't going to blink at a 1% decline after a four-fold gain in two years.

VXX hasn't moved much, even on AAPL's bleahh days, until today. It was up to 30.12 when I first checked, and later reached an intraday high of 30.50. That's what video of riots in Egypt will do. Last time I remember VXX moving was last May or so when video of Greek riots infected the market with fear. Making money off chaos — what a sick way to make money. But what a relief, too. It was far better to hedge with VXX rather than just accept intraday plunges in AAPL at the time.

Unless things get worse in Egypt, I don't expect to dip into VXX. The economic climate isn't ragged enough right now, and POMO/QE2/Obamanomics is still at the forefront. AAPL back over 340 as I type away.

8:46 am (Hawaii time). Down goes AAPL! Down goes BIDU! Down goes Ford! Ow. Ow. Owwww.

Being 100% cash gives me the luxury of sleeping through the session, waking up at a decent hour here in the islands with the perfect breeze and warmth (73 degrees). I work my ass off and I enjoy it, so much so that vacation is not a big deal to me. After all, I live in paradise when it comes to weather.

As for the market, VXX has boomed since I saw it at 30.12 early on today. Now at 31.84, off its high of 32.50. That's a gain of 7.5%. Can't last, right? Well, VXX doesn't always move like a normal stock, being the alien oddity that it is. I mean, someone could do a study and find that the rise and fall of VXX is entirely dependent on CNBC video footage of carnage (Greek or Egyptian riots) or lack thereof.

AAPL, meanwhile, is struggling to stay above 336. I still believe 332 is the next floor if shares don't hold here, and then 326 as support. If it falls below 326, then run for the hills. I don't see that happening, but just remember, no matter how incredibly powerful the numbers are, the frailty of the human mind is constant. Traders sent AAPL from 200 to 80 just a few years ago. Avoiding the treacherous downturns is key.

If you own FAZ, GLD, QID or even NFLX, hat's off to you. FAZ is up 4% (not touching that piece of...) and QID is up 4.8%. GLD is up 2%. NFLX is staying green (+0.24%). I'm not messing with that either.

Right now, more people are interested in life in Cairo than ever before. With the cellphone/media block lifted, there will be more and more footage to watch. I didn't think much of that early this morning as I watched AAPL and VXX half-asleep. But it behooves me to take a closer look at CNBC, CNN and every other media outlet that may be having a slow news day. If anything, a tiny toe in the VXX water might be worthwhile.

Things ain't getting better in Egypt instantly.

11:01 am (Hawaii time). Took a teeny nibble of VXX at 32.11 before the closing bell. Sure, I could've done the same thing early in the day when I saw it at 30.12, but I try to avoid trading decisions while I'm still in bed, groggy and barely conscious. Why not a bigger position? VXX is like few other stocks, being a steroid-infested ETF. It can change price overnight (or weekend) without any logical reason. Things could still be combustible on the streets of Cairo and VXX could open much lower on Monday. I'm guessing things aren't entirely resolved by then. It seems Obama will keep his distance; his warnings went unheeded, and he is likely in no mood to babysit the Egyptian government. Thirteen dead, 1,000 injured. That's no Greece. So, things may stay chaotic and VXX will possibly rise.

The last time VXX blossomed like a cactus flower, it was May of 2010 and those lazy Greeks were starting a mess in the streets of Athens. Even burned down a bank. What did VXX do? It nearly doubled (from 74 to 144) over the course of one month. I realize we don't have the economic crisis barfing all over us anymore, but the reality is VXX is going up.

VXX was at 29 early this morning. Maybe the run is done after a 9% gain (at this point in afterhours trading). If VXX collapses somehow and I hit my pain threshold (27), fine. But if it goes anywhere near a double, I make a few bucks because of human psychology (groupthink, fear, blahblahblah) and technology (news video of burning cars and crazy, pissed-off young men). This inflation crisis has been brewing for years now. People want their bread cheap. I would too.

My position and risk is miniscule, so why bother, right? I think it's okay now and then to take on a near-zero-risk trade just for fun, to keep the hairs on my neck prone. At least until AAPL settles down, finds a new base and starts climbing toward its rightful place as the greatest company in market cap on Earth.

Why not bet big on world chaos? I know there are a zillion traders who do this, many who bet big early this morning and were rewarded with 6, 7, 8% gains in mere hours. More power to them. After all, how much risk is there when simmering heat erupts like a raging volcano before our eyes. It could easily get worse. This stuff doesn't get cured overnight — rampant unemployment, high illiteracy rate, almost zero freedom of speech — so it was, in the minds of many, a calculated, low-risk trade on VXX this morning. Not just VXX, but oil and gas, gold and silver. Maybe I'll join these astute risk-takers one day.

Until then, VXX is up to 32.22 afterhours and my interest remains piqued.





















first photo: Associated Press
second photo: Reuters

Thursday, January 27, 2011

Tales of Thursday

Philip Elmer-DeWitt takes a look at Apple analyst Charlie Wolf (Needham).

Elmer-DeWitt noted Wolf's miscalculation in his Amateurs vs. Professionals list after Apple's Q1 earnings: Wolf "underestimated Apple's revenues by $3.73 billion and its iPad sales by more than 2 million units."

Today, Wolf explained that in-store sales are "fluctuating wildly." It's not easy being an analyst these days, with reports that as many as 15,000 of them have been laid off in the past year or so. Meanwhile obsessed scribes on the interweb nail the numbers far, far better than the pros. Wolf and his fellow pros catch a lot of flak and they're held accountable to the highest degree on the net, but they can relax to an extent. After all, they've got medical coverage and nice desks, and most Appleholics realize that these tie-and-coat types have dozens, even hundreds of other stocks to track.

I read the analysts. I trust the bloggers.

Cashed out

Cleared out my AAPL position above 343 for gain of $8. Pros: Glad I didn't sell lower on Tuesday or Wednesday. Cons: Could've sold at 345+ yesterday. Technically, 343+ wasn't a great price, but I wanted to lock in rather than risk a slide below 343. 

It's not so simple staying awake without Red Bull but it's worth the effort. It'a 2 am here most nights when I get to bed, or I'll stay up and long as I can after premarket begins at 3. (Opening bell is 4:30 am Hawaii time.) Unless I quaff some Red Bull, I'll blink and it's lights out for a few minutes or hours, and AAPL has gained or lost a buck or two. AAPL is out of steam, down fractionally while the market is up fractionally. The momentum has been halted (shares had 19-buck run in two days) and I'm not sticking in a position just to see how far it drops. Yes, I'd rather hold for the long term, but only if I get a cheaper price. I think a selloff will take it below 335. Volume is weak, there's no near-term catalyst ahead anymore (Verizon deal, Obama, earnings). 

I also think this could a new floor here at 343. Could be anything from MMs holding the price here before they pin it to 345 to ... who knows. 

Flat as an iPad

Combing through cyberspace the past 12 hours, there seemed to be some sense of belief that AAPL is due for a pit stop and pullback, and I wouldn't disagree. After all, there's been hardly a pause since shares dipped to 326 (twice). What goes down must go up in Apple's gravitational pull.

Yesterday, shares were up in premarket, up to 344, before selling off to 341 after the opening bell, then running to 345 before closing a hair below 344. The momentum, some said, was gone. They might be right. AAPL is up a buck and change in pre-premarket to 345. By the time retail traders get their hands on it (10 minutes from now), it could drop again. That wouldn't surprise me.

Do I get out then? Maybe. Nokia announced drastic downturn in sales, no question due to the iPhone's popularity. The bulls are happy with Obama's speech, which means the buying will not cease, at least until QE2 fades in a few months.

NFLX is on fire, now up to 208.40 premarket after last night's robust earnings report. I have no interest in touching a scalding-hot issue like that, but it doesn't hurt AAPL to have such an effective app (Netflix) in house.

Wednesday, January 26, 2011

Apple evangelists vs. heretics, Jan. 26

Adds Moises Levi, chartist and AAPL agnostic.

Evangelists
• Jon Najarian, Optionmonster, January 25, 2011
http://twitter.com/#!/optionmonster/status/29929259619328000
"ya think ;-) RT @lenk_ Thats right. NFC going to be big. And if you mention it on CNBC, every grandma is going to know about it."

http://twitter.com/#!/optionmonster/status/29930790875828224
"bottom line: Gets $AAPL in payment stream, bad for $V, $DFS, $MA, $AXP, $COF RT"

• Ray Merola, January 25, 2011
http://seekingalpha.com/article/248380-apple-a-sound-value-stock-for-conservative-investors?source=yahoo
"Using a 19X multiple, not much different than today's, I get a target price of $437 per share. Note that this multiple is less than the expected EPS growth rate for the upcoming one, two and five year periods. It's also less than the trailing five-year average multiple. The stock price today is about $335 a share. Therefore, this price target represents potential one-year upside of 30 percent."

• Gleacher & Co., January 19, 2011
http://www.streetinsider.com/Analyst+Comments/Gleacher+%26+Co.+Maintains+a+Buy+on+Apple+(AAPL)%3B+Margin+Structure+Headed+North+Once+Again...Target+to+$400/6223177.html
Buy rating maintained
New target: $400 (raised by 50)

• Dennis Hildebrand, Apple's Gold, January 18, 2011
http://dennyhil.blogspot.com/2011/01/q1-2011-actuals-my-grades-and-beyond.html
"I'm convinced that leadership is solid, even when Jobs retires, or backs away — Long term, this company is in great shape and I still believe that Apple will hit 590 by mid 2012. ... I'm holding my shares, I'm going to enjoy the ride all the way to 800."

• Brian White, Ticonderoga Securities, January 18, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Maintained "buy" rating
Target: $550 (raised by 100)

• Gene Munster, Piper Jaffray, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Target: $483 (increased by $45)

• Jeffries, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Merrill Lynch/Bank of America, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Goldman Sachs, Still on Conviction Buy List, January 18, 2011
http://www.marketfolly.com/2011/01/goldman-sachs-note-on-steve-jobs-apple.html
Goldman's 12-month price target on shares of AAPL is $430.

• Citigroup, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $415

• Morgan Stanley, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $410

• James Altucher, author/investor, January 18, 2011
http://www.jamesaltucher.com/2010/12/the-one-reason-apple-will-be-the-first-trillion-dollar-market-cap-company/
"I'm still convinced the fundamentals are there to make $AAPL the first trillion dollar company." (StockTwits.com)

• Maynard Um, UBS, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Revised iPad sales estimates from 5.5 million to 6 million.

• Michael Shulman, Short Side Trader, January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The company is on a roll, doubling in revenues during the Great Recession and Jobs' views are deeply embedded in the corporate culture."

• Jason Schwarz, Economic Weather Station
January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The problem with selling because of the health of Steve Jobs is that his premium is not even priced into the stock. If it were, AAPL would be at $750 a share. This stock TRADES on Steve Jobs, but it is not PRICED for Steve Jobs."
January 20, 2011
http://seekingalpha.com/article/247542-apple-s-secret-ingredient-involves-more-than-just-steve-jobs
"Any selloff that we see over the next month is the result of normal Apple trading patterns and should not be confused with any kind of long term change in investor sentiment."

• Jerry Jordan, Hellman, Jordan Management Co., January 19, 2011
http://www.djnewsplus.com:80/login?URI=/article/0,,SB129538744009510614,00.html?mod=article-outset-box
"Arguably, there isn't a Steve Jobs premium," said Jordan, who said Apple shares are cheap and bought some earlier in the day.

Agnostics
• Moises Levi, January 26, 2011
http://gicharts.blogspot.com/2011/01/apple-inc-aapl-chart-analysis.html
"Yes, buy on the dip did work. Focus still on that broken trend, and the volume warning. Was the good news priced in? Sell trigger is clear. It's not your typical up trend. It will start to be more volatile. AAPL probably needs a long stable channel pattern."

Heretics
• Zenpenny, January 25, 2011
http://www.zenpenny.com/wp-content/uploads/2011/01/AAPL-1-25-11.gif
"Typically, when patterns like this occur after a large run like AAPL has had, they are reversal patterns or at the very least, the beginnings of a consolidation."

I would never Fib

Actually, I would and I have before — fib, as in use Fibonacci to my advantage. Maybe it's just sheer probability and numbers that convince me that I actually get close when I try to guess lows and highs. Take this morning's premarket action in AAPL.

It hit 344.90 before peon retail traders could touch it. (That would include me.) A 61.8% retrace would bring AAPL down to 342.71. So, which the rest of me wondered about getting out here — can it get any better after this run from 326 when most of the trading world is high on Obama and POMO? No, it's due for a pullback, small or large.

But as I wondered about selling, AAPL snuck below 344 and wandered about in the 344.50 area. When it dove near 344 and change, I really wanted to get out, but I kept watching. Of course, once it sank below 344, it dove warp-speed fast to 343. Then an interesting thing happened as I froze up and waited to see if this Fib would stand. Shares hit 342.50 or so, then bounced in a flurry and headed back north of 343. Trading now at 343.02 with the bid at 343.24.

My hunch before PM was that it would peak right off the bat with some typical MM gameplay, then sell off until the opening bell. I wasn't totally wrong on that but I am surprised it's holding at 343. Obama's speechgiving talent has juiced the market before, but it never lasts. Time may have come for me to just leave my AAPL position be and let QE take hold on the market as a charmer would lull a cobra.

Update, 5:11 am (Hawaii time): All the momo homerun stocks are in quicksand, well, most of them. The oddest thing might just be happening right now — money is rotating out of stuff like NFLX and into ... AAPL? Sounds weird, but on an otherwise flat day so far (45 minutes in), AAPL has stayed in the green. It lost most of its premarket gain, but is on a tear. The machines are humming and they're buying up AAPL. Glad I didn't sell. Ticker is ripping ahead at 344.40 and counting.

If everything else is basically red and AAPL is one of the few in the green, what does that bode for the rest of the day? Is AAPL due to sell off? Nothing is safe in a correction, but right now, there's no insanity in the economy and market. Not like the past two years.

Update, 5:25 am. My TV is on mute and I've been disinterested in CNBC's usual yackle (my word), so it took a tweet from the imperial Mr. Fly to inform me that the Dow is north of 12,000 now. Really, just like that, the market turned green. That only helps AAPL, which is holding its ground above 344, might crack 345. All because of ... Dow 12,000?

Really. Is it 50% psychological? Or is it really 90% psych? After all, if I trusted my numbers, I wouldn't have hesitated to add more AAPL for a quick trade when it hit 342+. But instead, like the average peeboy, I really wanted to sell. At the day's bottom. Trademark of a loser, and another dumb habit I just haven't defeated yet. But I didn't sell, so there. Progress.

AAPL now at 344.93. Now 345.00. Bada Bing!

8:00 am. Well, can't say I'm surprised. Any time Obama makes a big deal about clean(er) energy, Nat Gas stocks explode, pun intended. Of the 40 on my little "Nat Gas for Obama" watch list, 38 are in the green and most of them are 1, 2, 3, even 5+% higher right now. I suppose some savvy traders jumped in yesterday (or prior), but I'm not touching nat gas. Though clean energy is going to be real someday, it's a 25-year plan in the making (2035 is the target date for 80% clean in the US). This is capable of being a lengthy nat gas run, but when it runs out of legs, like it did last year, bagholders will be left behind, crispy and toasty.

Just doesn't have the staying power. I like AAPL.

9:19 am. Dave Fry likes to note a 2:15 (Eastern) buy program by the machines has lifted the market lately. Sheer manipulation by the Fed, he says. Fine with me. I just saw AAPL shares go bonkers for several seconds and his words came to mind. But now AAPL has dipped below 345 to 344.33, waffling as it has in this range for the past few hours. I have some thoughts about the FOMC meeting and how one odd sentence could send the market off its rails.

In the near term, AAPL has fewer potential catalysts than it's had in months. It won't take much to knock it off the hill some. And as I type that, AAPL dips below 344 and selling pressure is mounting. Probably better off getting some sleep.

9:29 am. On CNBC: FOMC: RETAINS PLEDGE TO KEEP RATES EXCEPTIONALLY LOW FOR "EXTENDED PERIOD"

And AAPL bounces from 343.90 to 344.49 in a split second. Still waffling, but it's no-news-is-good-news. Now let's see if AAPL can close above resistance (345+).

Tuesday, January 25, 2011

Tuesday tales of Apple

Apple would make quite a bank one day. Not sure if that's any good for shareholders, but it would be cool to look at.

Bloomberg: Apple plans service that lets iPhone users pay with handsets

Apple evangelists vs. heretics, Jan. 25

Adding Jon Najarian, Ray Merola to the list.

Evangelists
• Jon Najarian, Optionmonster, January 25, 2011
http://twitter.com/#!/optionmonster/status/29929259619328000
"ya think ;-) RT @lenk_ Thats right. NFC going to be big. And if you mention it on CNBC, every grandma is going to know about it."

http://twitter.com/#!/optionmonster/status/29930790875828224
"bottom line: Gets $AAPL in payment stream, bad for $V, $DFS, $MA, $AXP, $COF RT"

• Ray Merola, January 25, 2011
http://seekingalpha.com/article/248380-apple-a-sound-value-stock-for-conservative-investors?source=yahoo
"Using a 19X multiple, not much different than today's, I get a target price of $437 per share. Note that this multiple is less than the expected EPS growth rate for the upcoming one, two and five year periods. It's also less than the trailing five-year average multiple. The stock price today is about $335 a share. Therefore, this price target represents potential one-year upside of 30 percent."

• Gleacher & Co., January 19, 2011
http://www.streetinsider.com/Analyst+Comments/Gleacher+%26+Co.+Maintains+a+Buy+on+Apple+(AAPL)%3B+Margin+Structure+Headed+North+Once+Again...Target+to+$400/6223177.html
Buy rating maintained
New target: $400 (raised by 50)

• Dennis Hildebrand, Apple's Gold, January 18, 2011
http://dennyhil.blogspot.com/2011/01/q1-2011-actuals-my-grades-and-beyond.html
"I'm convinced that leadership is solid, even when Jobs retires, or backs away — Long term, this company is in great shape and I still believe that Apple will hit 590 by mid 2012. ... I'm holding my shares, I'm going to enjoy the ride all the way to 800."

• Brian White, Ticonderoga Securities, January 18, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Maintained "buy" rating
Target: $550 (raised by 100)

• Gene Munster, Piper Jaffray, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Target: $483 (increased by $45)

• Jeffries, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Merrill Lynch/Bank of America, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $450

• Goldman Sachs, Still on Conviction Buy List, January 18, 2011
http://www.marketfolly.com/2011/01/goldman-sachs-note-on-steve-jobs-apple.html
Goldman's 12-month price target on shares of AAPL is $430.

• Citigroup, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $415

• Morgan Stanley, January 19, 2011
http://notablecalls.blogspot.com/2011/01/apple-nasdaqaapl-new-street-high-target.html
Target: $410

• James Altucher, author/investor, January 18, 2011
http://www.jamesaltucher.com/2010/12/the-one-reason-apple-will-be-the-first-trillion-dollar-market-cap-company/
"I'm still convinced the fundamentals are there to make $AAPL the first trillion dollar company." (StockTwits.com)

• Maynard Um, UBS, January 18, 2011
http://www.wirelessweek.com/News/2011/01/Apple-Shares-Fall-Jobs-Leave-Business/
Revised iPad sales estimates from 5.5 million to 6 million.

• Michael Shulman, Short Side Trader, January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The company is on a roll, doubling in revenues during the Great Recession and Jobs' views are deeply embedded in the corporate culture."

• Jason Schwarz, Economic Weather Station, January 18, 2011
http://seekingalpha.com/article/246925-apple-parsing-steve-jobs-memo#comment-1411649
"The problem with selling because of the health of Steve Jobs is that his premium is not even priced into the stock. If it were, AAPL would be at $750 a share. This stock TRADES on Steve Jobs, but it is not PRICED for Steve Jobs."

• Jerry Jordan, Hellman, Jordan Management Co., January 19, 2011
http://www.djnewsplus.com:80/login?URI=/article/0,,SB129538744009510614,00.html?mod=article-outset-box
"Arguably, there isn't a Steve Jobs premium," said Jordan, who said Apple shares are cheap and bought some earlier in the day.

Agnostics

Heretics
• Zenpenny, January 25, 2011
http://www.zenpenny.com/wp-content/uploads/2011/01/AAPL-1-25-11.gif
"Typically, when patterns like this occur after a large run like AAPL has had, they are reversal patterns or at the very least, the beginnings of a consolidation."

Monday, January 24, 2011

Heady Apple reading

From today's headlines:

Rob Enderle: Steve Jobs' Most Valuable Lesson for Apple
Philip Elmer-DeWitt: A fantastic use for Apple's cash
Michael Shulman: Eight Cult Stocks to Avoid in 2011
Seth Weintraub: Sub-$100 Android phone hits U.S. shores

First things first

It's 7:34 a.m. in Honolulu. Cloudy and cool. I got some work done early this morning, a big chunk out of the way. I did notice AAPL at 332 earlier, but kept at work and did not allow myself to be distracted by the market.

AAPL is now teetering up at 335, roughly a 2.5% gain from Friday's close above 326. Volume is moderate (12.3 million shares) compared to last week (26M to 67M between Tuesday and Friday), but it's still a notable session so far. Are the big boys piling back in? Is this all about retail frenzy? Both?

I wouldn't be afraid to re-enter at these levels considering the probability of AAPL shares hitting 400 at some point this summer or fall, if not winter. But I'm in no rush here. AAPL usually bounces in a channel after the earnings selloff, so there's money to be made for short-term traders. I've liked 332 as a pivot point for 10 days now, having watched since 332 as shares rose to 357. I refuse to be superstitious about 332 itself, but it's clearly an area worth examining.

The sky isn't falling regardless of Shanghai or any other hotspot in the markets. I'm going to recite certain mantras to myself in the coming days and weeks that will include the wisdom of trusting fundamentals, watching for dark skies on the horizon and being equally flexible and anchored. After all, a buy-and-hold AAPL shareholder at 80 has done quite well. So has a trader who understands the channels of AAPL's price range and swings appropriately.

Back to work.

Update, 10:41 a.m. Reopened a position in AAPL around an hour ago at 335.34. Not exactly early to the party, but it'll do for now.

Update, 1:42 p.m. Maybe should've unloaded at 338, but I really wasn't expecting that price afterhours. (After hitting 338 for an instant, shares settled back closer to 337. Now at 337.20 AH.) There's always that sliver of a chance that some catastrophic news could hit the company and stock overnight, which is lame rationale for selling AAPL while up just $2 or so.

Here's some technical insight from one of the greatest traders on Earth, StockGuy22.

Friday, January 21, 2011

Friday frenzy?

It's 4:35 a.m. in Hawaii and my screen probably looks a lot like yours: Everything is pretty much green. AAPL, which touched 330 yesterday before closing at 332 — the level I liked 10 or so days ago, but chose to not buy at — is moving up on massive early volume. It's only a few minutes in, but shares are over 334.

The bounce off 330 has been fairly notable, but whether this sticks, nobody really knows. All I can surmise with a guess is that share price will fluctuate for days, perhaps weeks. That's how AAPL rolls after earnings reports. Roll it shall.

Update, 6:48 a.m. AAPL back to 330+. Predictable enough on options exiry. Now 329.87 and there go the stop-loss orders. I'm 100% cash, not touching any Apples today.

Update, 12:57 p.m. Slept nice this morning, woke up to find a lot of red bleeding in the market. I can view it without the emotional tangle since going flat the other day, down 1% for the year based on a whopping single round-trip trade on AAPL. But to see that many other traders are down 3%, 8%, even 10% already is a bit disheartening. It's also not entirely unexpected. All the bulls were at the front of the ship and it was tipping over, even as I jumped on board last week. I hope every escapes unscathed, but the market has no mercy. Stick your finger in and your entire arm can be taken unless extreme caution to exercised.

AAPL closed at 326.66, roughly 8.7% down since its afterhours high of 357 earlier this week. A 10% haircut would bring it down to 322 or so. A 20% chomp would bring AAPL down to 285. I don't see a fall below the latter number — 1) Fundamentals are too strong, and 2) President Obama needs to gain public approval in this third year of his term.

With Nasdaq down (-0.41%), AAPL slipped 1.83% on slightly higher volume. GOOG fell 2.5% to 611 after a huge runup. It was at 640 before I crashed out this morning.

The issues I watched more closely today, stuff that may work fairly well in a choppy market, were a mixed bag. TBT dropped 1.3% while TLT (its opposite, more or less) gained 0.76%. VXX gained 1.79 percent, which surprised me. When the market sold off some yesterday, VXX was in the red. There's more negativity in the market now and I missed the VXX ride today.

The hottest momo rockets continued to fizzle. RLOC (-5.1%), LULU (-0.5%), NFLX (-1.9%).

Another weird turn was FAS (+1.9%). Finnies were hot, which kept the Dow Jones green. C (+1.5%) and JPM (+1.1%) did quite nice. GS, not so much (+0.3%).

A mega winner was ISRG (+12.7%) on more than six times normal volume after earnings. GE hit one out, too (+7.1%) with good earnings, and DIS was rolling (+1.5%) while AMZN ate dirt (-2.7%).

This is the kind of action that whipsaws those of us with a penchant to go all in (or close to it), those of us who react to defeat by reaching in and going double in. Don't do it, people! Step away, let the market do its thing, which right now is eating its own vomit. If you must re-enter, do it one bit at a time. Give it a chance to get back on its feet. Otherwise, you're betting on home runs while the market is dealing with tremors.

Thursday, January 20, 2011

Thumpdown Thursday

It was just a couple of years ago, maybe 18 months, when an old friend bought some GOOG at 432. He was satisfied until the market sold off in a major correction and his shares sank 100 bucks or so. He held on. He was rewarded. GOOG is trading at 644 afterhours thanks to a robust earnings report, up 2.75% from the close (626). Quite a run, but will it top out like AAPL? Apple lost its CEO (temporarily?), Steve Jobs, due to medical issues. GOOG just announced that CEO Eric Schmidt is changing positions. He tweeted that "adult supervision is no longer needed."

If I were a GOOG shareholder, I'd tweet, "WTF???"

I slept marvelously through today's market, catching only the first 30 minutes or so. AAPL declined to 330 before bouncing to 332. Those round numbers, 350, 340, 330 ... they play with trader psychology, no question. StockGuy22 has always noted that. He's right.

My hunch that VXX would benefit from an AAPL pullback (1.8%) was wrong. VXX is down (-1%) in a market absent chaos and complete unpredictability. VXX clearly does well when there are riots on the streets of Greece or when North Korea sends missiles into the air. But here, VXX is hemmed in by a quiet global environment, so I'm exploring other issues.

ETFs on an upswing in a down market today: TBT (+2.6%), DPK (+2.3%), EDZ (+3.1%), EEV (+2.2%), FXP (+3.1%), LHB (+3.8%), SMN (+2.7%), TZA (+3.1%).

Others up today: FSLR (+2.6%), STP (2%), SOLR (+4.3%), V (+2.3%), MMR (+5.9%)

The hardest hit today were also some of the hottest risers: NFLX (-3.1%), AMZN (-2.6%), POT (-3%), VMW (-3.8%), NILE (3.2%), NTDOY (-5.3%), BIDU (1.5%), CRM (-6.4%), FWLT (3.5%), SNDK (-3%), YUM (-1.3%), JOYG (-3.7%), QCOM (-1.5%), ANSS (-5.1%), AKAM (-2.3%), GIGM (-3.5), TQNT (-4.3%), RHT (-5%), UA (-2%), RAX (-10.9%), SLV (-4.4%), GLD (-1.9%)

Most of these stocks were due for a pullback, just like AAPL.

The threat of rising interest rates could simultaneously dent both the stock and bond markets. Taking a very close look at TBT tomorrow.

Some of the steady risers didn't sell off much, if at all today: F (-0.7%), IMAX (+0.6%), C (+0.8%).

Good to be in cash. Better to be flexible and stay one step ahead, or in my case, off the field and on the sidelines.

Wednesday, January 19, 2011

Pros vs. Amateurs

Pros still suck. Here's Philip Elmer-DeWitt's extensive compilation of Apple analysts, profession and otherwise.

Elmer-DeWitt: Apple's blow-out quarter: The bloggers called it, the Street blew it

Apple's hump day

It's Wednesday, 3:31 a.m. in Honolulu. Sky is dark, weather is good for a change (seriously, the gusts and rain and sub-70 degree weather can be jolting) and Apple is trading at 347 premarket. Most times, after earnings, retail and fundies are heading for the hills with their profits, leaving shares behind to burn, burn, burn lower.

Now? Every analyst in sight is raising his price target. The pressure on the buy side is strangely positive. The more I think about it, the stranger it seems. The less I think about it, the more I can digest and move on and ... reload my position? I sold half yesterday to reduce risk, fine and dandy, but that was 7 points ago. If the Apple train is going up, up, up, I'm jumping on for the ride.

More updates coming through the day. Sticking to one post only, if possible.

Update, 3:39 am: AAPL surging with increased volume in premarket, blasting through 348 right to 349. If the fundies are starting to grab up shares now, retail buyers won't get another shot at sub-350. That's a big if.

Update, 4:39 am: Showed some strength in that premarket surge, but petered out above 350. Round numbers, human psychology, yadayadayada ... AAPL was still in the 348-349 range before the bell, but once it rung, shares slipped to 347 and have been slipping since. More sellers than buyers? Fundies waiting it out as retail traders panic and/or stop-loss orders trigger en masse? Probably yes on both. My chance to sell at 350 has probably passed, so I'm ready to unload my half-position at a minor loss with AAPL now at 344.22. Sure, I was greedy, but if fundies are going to stay away for long, AAPL could easily plummet back to the 330s. It's happened before, will happen again ... only remaining question would be, with so many analysts raising their targets above 410, it would just be a matter of time before the sharks fight with other sharks for those shares. There will be blood in the water one way or another. ... 
If AAPL stays in this range above 344, I might just let that half-position ride. I'm flexible like that.

Update, 5:33 am: My flexibility wore out and I dumped the half-position at 340.15 for a small loss. Not the way I planned to trade AAPL for the first time in a half-year, but I knew the odds were longer, that the ship was top heavy and due to tip over. After hitting yesterday's high (357 afterhours), my numbers told me it was due for a pullback. I'd expected a high of 352, and that was without Steve Jobs' health issues. The pullback could go back to 337 or 332. But it's also possible that the boat is just being cleared of weak hands, who are now overboard after jumping off just above 340. AAPL is back above 341. It would not surprise me to see shares stabilize between 340-345 for some time as retail traders take their profits, latecomers (like me) get shaken out, and the fundies start hoarding shares when the coast is clear. Volatility is going to stay with AAPL for some time. The faster hands will get the best deals.

Update, 6:13 am: Afterhours yesterday, following the stock halt and earnings announcement, the MMs ran AAPL from 341 (close) to 357. Then it simply plummeted to 344 before AH ended. They did the same thing this morning, running AAPL to 351 before it dropped going into the opening bell. There is simply not enough buying pressure; the price was fluffed up by MMs on both occasions. That's why I'm resisting the possibility of re-entering here. Until the fundies return in force to push AAPL up, it will tread water. Path of least resistance is to the down side. I should remember that next time I'm several bucks up on an overbought stock. This range will probably hold through options expiry on Friday.

Update, 12:17 pm: Guesstimate High 352; Actual High 357 (afterhours Tuesday). Guesstimate Pullback to 337 or 332; Actual Pullback to ___. AAPL hit 337 in the final minutes today before closing at 338. Is the selloff over? I slept peacefully after hitting the sack around 6:30 am, so I don't have a good feel for how shares traded in the final 3 1/2 hours. But the selloff was imminent and (yesterday and early today) I tried to buck my own prognostication, being the greedy pig I am. I remain in wait-and-see mode. One of the many lessons of my 1% loss in this trade: I was ahead and still lost. When AAPL was north of 345, I was in the green. So, hindsight being my sarcastic, loudmouth friend, it's clear that I should have used and stuck to stop-loss targets. Physical or mental, doesn't matter, should've stuck to 344 as a stop-loss. Better to break even or lose a tiny sliver than ride it down — unless I planned to hold this long term. I'd like to, but in this churning, choppy market, no thanks. All the higher price targets in the world could not stop the selloff. As I mentioned earlier, they can say AAPL will go to 3,000, but it sure as heck doesn't mean they're getting in today at 351 premarket. The "smart money" is waiting for panic to recede before taking all the shares it can at discounted prices. Until then, I'm going to watch, dipping in and out quickly, if at all, and exploring VXX as a lethal weapon in a blown-out market.


Update, 3:27 pm: I have a natural inclination and disposition for complexity. No, I am not claiming to be a genius. What I'm saying is I am attracted to chaos at some level. Example: instead of buying and holding AAPL at 95 to infinity*, I sold at 110 or so. Instead of buying and holding AAPL at 214, I sold at 257 (after riding it down to 195). No, instead of holding the mightiest force of technology available to the common man, I winged it up and down using VXX as a hedge occasionally. Sometimes it worked well. Sometimes it made no difference, a wash in the end. Back to disposition ... I took a look at VXX's rate of failure since last summer. Colossal. But examine the 1-minute chart from today's trading; VXX ran 5% up while AAPL faded. 


AAPL 1-year daily (January 19, 2011)

AAPL vs. VXX 1-year daily (January 19, 2011)



AAPLvs. VXX 1-day, 1-minute (January 19, 2011)




Apple evangelists vs. heretics, Jan. 19

Time for a new collection of bulls and bears now that Q1 earnings and news of Steve Jobs' medical leave are behind (barely). I'll update with previous bulls and bears periodically.
Evangelists
Dennis Hildebrand, Apple's Gold, January 18, 2011 LINK

"I'm convinced that leadership is solid, even when Jobs retires, or backs away — Long term, this company is in great shape and I still believe that Apple will hit 590 by mid 2012. ... I'm holding my shares, I'm going to enjoy the ride all the way to 800."
Brian White, Ticonderoga Securities, January 18, 2011 LINK

Maintained "buy" rating
Target: $550 (raised by 100)
• Gene Munster, Piper Jaffray, January 18, 2011 LINK
Target: $483 (increased by $45)
• Jeffries, January 19, 2011 LINK
Target: $450
• Merrill Lynch/Bank of America, January 19, 2011 LINK
Target: $450
• Goldman Sachs, Still on Conviction Buy List, January 18, 2011 LINK
Goldman's 12-month price target on shares of AAPL is $430.
• Citigroup, January 19, 2011 LINK
Target: $415
• Morgan Stanley, January 19, 2011 LINK
Target: $410
• James Altucher, author/investor, January 18, 2011 LINK
"I'm still convinced the fundamentals are there to make $AAPL the first trillion dollar company." (StockTwits.com)
• Maynard Um, UBS, January 18, 2011 LINK
Revised iPad sales estimates from 5.5 million to 6 million.
• Michael ShulmanShort Side Trader, January 18, 2011 LINK
"The company is on a roll, doubling in revenues during the Great Recession and Jobs' views are deeply embedded in the corporate culture."
• Jason SchwarzEconomic Weather Station, January 18, 2011 LINK
"The problem with selling because of the health of Steve Jobs is that his premium is not even priced into the stock. If it were, AAPL would be at $750 a share. This stock TRADES on Steve Jobs, but it is not PRICED for Steve Jobs."
• Jerry Jordan, Hellman, Jordan Management Co., January 19, 2011 LINK 
"Arguably, there isn't a Steve Jobs premium," said Jordan, who said Apple shares are cheap and bought some earlier in the day.

Agnostics

Heretics

Tuesday, January 18, 2011

Apple evangelists vs. heretics, Jan. 18

Time for a new collection of bulls and bears now that Q1 earnings and news of Steve Jobs' medical leave are behind (barely). I'll update with previous bulls and bears this week.

Evangelists
Goldman Sachs, Still on Conviction Buy List, January 18, 2011 LINK
Goldman's 12-month price target on shares of AAPL is $430.

Dennis Hildebrand, Apple's Gold, January 18, 2011 LINK
"I'm convinced that leadership is solid, even when Jobs retires, or backs away — Long term, this company is in great shape and I still believe that Apple will hit 590 by mid 2012. ... I'm holding my shares, I'm going to enjoy the ride all the way to 800."

James Altucher, author/investor, January 18, 2011 LINK
"I'm still convinced the fundamentals are there to make $AAPL the first trillion dollar company." (StockTwits.com)

Gene Munster, Piper Jaffray, January 18, 2011 LINK
Target: $438

Maynard Um, UBS, January 18, 2011 LINK
Revised iPad sales estimates from 5.5 million to 6 million.

Brian White, Ticonderoga Securities, January 18, 2011 LINK
Maintained "buy" rating
Target: $450

Michael Shulman, Short Side Trader, January 18, 2011 LINK
"The company is on a roll, doubling in revenues during the Great Recession and Jobs' views are deeply embedded in the corporate culture."

Jason Schwarz, Economic Weather Station, January 18, 2011 LINK
"The problem with selling because of the health of Steve Jobs is that his premium is not even priced into the stock. If it were, AAPL would be at $750 a share. This stock TRADES on Steve Jobs, but it is not PRICED for Steve Jobs."

Agnostics

Heretics

Revisiting strategy

A week or so ago, I pinpointed (guessed) that AAPL would run to a near-term high of 352 before pulling back before or during earnings day. Well, things went quite differently with the news about Steve Jobs. Still, AAPL did hit 357 afterhours, if just for a few seconds, and has pulled back AH to 344.

My guess had been that AAPL would find a new floor around 337 or 332. It's almost impossible to get a read off AH trading, but if the fundies that are long stick in there based on today's astronomical earnings and guidance, 340 could be the new floor. I love guessing, but this is impossible to translate.

So, I'm holding my half-position, in no rush to sell or add shares. One thing is certain: the market is not comfortable with any negative news about Mr. Jobs' health, and that's a factor no shareholder can ignore or control. Ideally, he recovers fully and the company is at full strength. Without his day-to-day leadership, it's all about execution and profit margin, which will likely remain intact for the next year or more. No doubt that the road from 100 to 300 was much simpler to ride than the one ahead from 300 to 500 or 600 or even 900.

Whether AAPL can still double or triple from here in the next few years ... it's going to be tough without their marketing icon, Mr. Jobs. The products will still be cool. But media and marketing make a big difference in shareholder confidence. Groupthink, for better or worse, does matter. As someone who doesn't own an iPad, iPod or iPhone, that means paying more attention than ever to that immeasurable factor: Cool, or not Cool.

No numbers, just armchair quarterbacking

Numbers are numbers, which I'll keep in a separate, updated post. Here, just some links to stories post-Steve Jobs-medical-leave-announcement and post-Apple-earnings.

Dennis Kneale: Apple's Risk: Corporate Paralysis, January 18, 2011
Mike Schuster: What Apple Investors Should Really Worry About, January 18, 2011
Matthew Lynley: How long can Apple's growth in enterprise stay this quiet, January 18, 2011

Law of Large Numbers vs. Pure Growth

Just about every company that gets this big or anywhere within this orbit will hit a wall. Revenue will remain magnificent, but growth naturally slows. Not Apple, not yet.

So I'm going to keep an eye on the numbers, hopefully, more than I have before.

Here's a sound spreadsheet chart by firstadopter, who notes the astounding year-over-year growth: 14% FQ1-09 Dec; 32% FQ1-10 Dec; 71% FQ1-11 Dec.
See firstadopter's chart here

TechCrunch: Apple's Insane Q1 '11: 26.7 Billion Revenue, $6 Billion Profit; 7.33 Million iPads, 16.24 million iPhones
Business Insider SAI: Apple Crushes Earnings, Ships 7.3 Million iPads. Includes comparisons to estimates.
TraderFlorida's AAPL chart. Simple, true. Support held up today at 326.
Horace Dediu: Having added $20 billion last year, Apple's cash growth suggests total could top $100 billion next year
Philip Elmer-DeWitt: Apple's blow-out quarter: The bloggers called it, the Street blew it (1/19/10)

Apple smash

Better than the Incredible Hulk, Apple destroys all earnings expectations. The biggie (imho): 7.33 million iPads sold. Take that.

Well, shares were halted during the earnings announcement, then reopened a minute ago at 351, rose to 357. Now down at 353. No, 352. Profit-taking. Not the time to re-enter.

I could've held my full position, but halving the risk was sensible.

Update: 1:09 p.m. (Hawaii time): AAPL settling at 344-345 after the conference call. Hindsight, should sold the remaining half position above 350. Then I would've broken even; I opened the position at 345 last Thursday. All in all, though, after being down big when the market opened, the position is in much better shape. 

Half in, half out

Sold half the AAPL position at 340.88 for a minor loss (-4.79/share). I could've unloaded that or all the shares above 342 less than half an hour ago, but opted to wait. Why am I holding a half-position? That's pure risk to either side, up or down, but long term AAPL will make back today's drop (from 348). 

I look at it this way, too: by watching intermittently (as I slept) since 4 a.m., holding rather than selling in panic mode, I made roughly $1,400. AAPL went from 326 to 344, then to 341. My net is a loss on the half-position I sold, but had I sold at the open, it would've been much more. Is it faith? Patience? I don't know. I just know AAPL is the one stock that can come back. Fill in the blank for what the reason(s) may be.

I'm comfortable with a 10-point swing either way with the remaining half-position. I don't like risk, but I'm willing to accept it for the potential reward here. 

It is 9:59 am in Hawaii

The world hasn't melted or frozen or been invaded by aliens (that I know of). Steve Jobs is alive, Apple shares are almost back to normal and I'm still holding my position.

For now.

In one minute, my guess, AAPL's comeback from the opening price of 326 (down more than 22 bucks from the last session) will either survive the upcoming, final hour of the market ... or go into a sellers' tailspin that could send AAPL back to 335 or worse.

I never intended to hold my position into the final bell and earnings based on history: major selloffs after major runs. But today's action is gray-area stuff. Was the run from 326 to 341 (current) big enough to convince fundies to unload? It's a tough call.

And now it's 10:01.

Monday, January 17, 2011

Perspective vs. Panic

Probably the best pieces out there today regarding Apple and the news of Steve Jobs' health.

TechCrunch: A Few Thoughts on Apple's 2011, Stock, Tim Cook and the Future
New York Times: A Deep Bench of Leadership at Apple
iBankCoin: Ghouls, Bears and Sea Urchins

Tuesday strategy?

In the past, I've often traded AAPL short term in conjunction with VXX as a hedge. Mostly APPL along with a sprinkling of VXX. It worked well one day last spring while I was on the road, in my hotel room, sitting in the dark while CNBC blared and shares of everything sank. However, I was buoyed by that hedge move with VXX, and my overall account was barely in the red thanks to that decision. By the end of the day, AAPL had rallied significantly and I'd already sold out of VXX for a fairly good recovery.

It was insane. It was almost ... fun? Well, I wouldn't say it was sheer pleasure, but it taught me something about the unpredictability of the market when it comes to short-term trading.

In this instance, though, I went long AAPL on Thursday without a safety net. When the market opens tomorrow morning, VXX will be up big. (So will AAPL puts, but I'm not into options.) AAPL will be down big. AAPL will eventually recover, whether it takes a day, a week, a month or longer. But I do think a hedge should've been in place, and for overlooking the worst-case scenario, I will have to pay the price whether by selling at a loss or digesting a paper loss for "X" amount of time.

Tomorrow might still offer a profitable opportunity through VXX or puts, if that's your thing. How long will AAPL go down and stay there ... that's a question nobody can answer right now. I'm leaning toward playing some VXX.

Get Well, Steve Jobs

I've been offline for all of Sunday night, so this news is both fresh and stunning ... and saddening. I hope Steve Jobs' health returns, whatever he may be facing right now.

As for my timing in opening a position in AAPL two sessions ago, well, that modest paper profit just went poof for the time being. Brian Kelly was the first I saw to break the news of Mr. Jobs, noting also that Apple shares in Germany are down 2% so far today.

More details here: Steve Jobs goes on medical leave of absence.

Not sure what my strategy will be when the US market opens on Tuesday morning, but if I had to guess ... sharp decline in premarket and the first 20 minutes of the regular session, followed by bargain hunting. If our market follows what's happened in Germany today, AAPL will be down $7 to 341 or so in no time. It could easily be much more severe, and I'm not inclined to wait this out since I was planning to get out before the earnings report anyway. But any chance of shares increasing before earnings are announced Tuesday after the bell ... poof.

There were all kinds of possibilities that could take Apple and its stock down in the long term, but the only real certainty of that happening always centered around Jobs' health. Apple's dependence on him for creativity and discipline is extreme, more so than the old Chicago Bulls and Michael Jordan. All longs can do is hope the company has something positive to announce well before earnings, like maybe on Tuesday morning before the bell.

Whatever the case, it's been quite a run for patient longs.

Update, 4:32 a.m. (Hawaii time): Zerohedge reporting that Apple shares in Germany now down 8%. If that carries over to AAPL shares tomorrow morning, that's a drop of $27 from Friday's close of 348. And if that happens, it will not have mattered if AAPL longs had stop-loss orders or not. Pain around the corner, but that's the risk. Cut losses and get out, keep risk to no more than 2% max of your portfolio.

Saturday, January 15, 2011

Apple evangelists vs. heretics

Adding Dennis Hildebrand (evangelist), Joe Nocera (heretic).
Just for fun.
Evangelists
Dennis Hildebrand, Apple's Gold, December 28, 2010 LINK
"What a quarter for Apple! How long will this go on? I'm saying Apple will surpass 100 billion in FY 2011. That's 10 billion more than my earlier post. I say this because I believe the iPad is going to explode even more than what I earlier stated."
James Altucher, hedge fund manager/author, December 30, 2010 LINK
"One can go on and on with the metrics of how Apple blows it away but lets just say that in 2013, iPad and app sales represent about 40 percent of Apple’s gross profits. Total gross profits could be about $80 billion (today is $25 billion). Cash flow could be about 75 percent of that (like it is today), or about $60 billion. Slap a 20 times multiple on that and you have a market cap of $1.2 trillion. That’s a shareprice of about $1200 by 2013."
Maynard Um, UBS analyst, January 13, 2011 LINK
UBS analyst Maynard Um just raised his target on Apple to $415 (U.S.) from $365. According to Bloomberg data, that means 19 of the 54 analysts covering Apple now expect a price of at least $400.
Michael ShulmanMichael Shulman's Short Side Trader, January 12, 2011 LINK
"Apple makes better products far more in touch with customer needs than its competitors – and charges them for that quality. Steve Jobs is asked the same dumb question at every analyst meeting – why don’t you cut prices to grab share. Answer – quality and margins are more important than share."
Jason Schwartz, January 6, 2011 LINK
"Our move to add an 8% allocation of short term AAPL calls on the first day of 2011 trading has worked out remarkably well. ... In 2011 Apple will continue its crusade into critical mass which will result in an explosion of iData consumption."
Peter Misek, Jefferies & Co., January 11, 2011 LINK
Jefferies & Co. analyst Peter Misek is bumping his target on the tech darling substantially higher, going from $365 to $450. (Note: AAPL closed at 341.64 today.)
Heretics
Joe Nocera, New York Times, January 15, 2011 LINK
"Here’s the shocker, though. According to Gartner, in the second quarter of 2009, Android sales constituted 1.8 percent of all smartphones sold, compared with Apple’s 13 percent. By the second quarter of 2010 — just a year later — Android was actually outselling Apple, 17.2 percent to 14.2 percent. This must have been a shock to the system at Apple — it was being outdone by an uncool competitor. As much as anything, the success of Android is what finally pushed Apple into the arms of Verizon Wireless, which got much better terms than AT&T."
Scott Blier, January 10, 2011 LINK
"Are these people insane? Maybe it is I who is nuts for not owning it but it will continue to ramp without me. I am almost ready to make a bet that this is the Swan Song of Apple."

Agnonstics
James StewartSmart Money, January 14, 2011 LINK
"I'm not sure what worlds are left for Apple to conquer. ... Nor am I convinced Apple enjoys a natural monopoly, which may be one reason chief executive Steve Jobs has been so protective of Apple's technology. This is in contrast to Google, which can justify spreading its technology around since it does have a natural monopoly in search."