Since the whole world is waiting on Apple earnings I felt I had no choice but to tell my blog readers how I see it. I have good news and I have bad news, which would you like first? Okay I will give them both to you straight.
The bad news is that no one can give you the right ‘advice’ on what to do, the good news is that you can have a plan before hand. If you are a long term investor with a rock solid $800 price target in 2013 you should hold, if you are a day trader you should not be involved at all, if you are a position trader it would be wise to start new positions after earnings and go in flat, if you are an option trader you can structure a trade that fits your beliefs, long, short, bet on volatility or against volatility, etc. My position will be NONE I will be IN CASH because one of my rules is not to trade through earnings due to the risk. My #1 priority is risk management not profits.
The bad news for bulls is that earnings may not meet expectations due to the older product line for that quarter the good news is that it is already priced in both in projections and the price hence the sell off.
The bad news is that Apple is already very over owned by institutions and investors, the good news is that it will be whether they hold or sell that will drive the price higher or lower.
The bad news for bulls is that Apple is perceived as too big to continue growing the good news is that it is already priced in with a decreasing P/E multiple.
The bad news is that if the earnings are the least bit disappointing the stock could fall quickly to the 200 day or even lose it, the good news is that it will be a buying opportunity at a bounce off the 200 day or a retaking of it later if it does roll over.
The bad news for bulls is that the many think Apple is done and can not continue to grow and compete, the good news is that is not how monster stocks generally go out, they go out on a euphoric blaze of glory where everyone loves them as they go lower.
The good news for bears is that Apple is under distribution an in danger of losing its key 200 day level, the bad news for Apple bears is that at a 14 P/E, $100 billion in cash, and the hottest products and infrastructure cloud in the world it will have great difficulty truly ‘crashing’. True parabolic crashes come off P/Es of 40-100 during euphoric bull markets not during market corrections. And I am not a value investor I am a chart reader, but common sense dictates how to define reasonable price levels from historical data.
The bad news is that Apple has trouble making and distributing products fast enough, the good news is that every company wants that ‘problem’.
The bad news is that many have tons of gloomy reasons why Apple is in trouble and doomed to fall from here, the good news is that it is nothing I have not heard since 2007 and before. Apple continues to break all the rules about what is possible. SO FAR….
My trading plan is to wait until after earnings and play the trend that emerges tomorrow with weekly options to limit my downside but capture the trend in either direction. If we fall to the 200 day and rebound I will be long with a bounce off of it (IDEAL) if we lose the 200 day I will be short while we are under it, if we gap up and break to the upside and hold I will go long tomorrow morning.