Here’s the skinny on Apple (AAPL).
Discussed in this article: Apple Inc ( $AAPL )
I want to look at Apple ( NASDAQ:AAPL ) tonight. This is where the stocks trading, and my bet is that $500.00 is going to hold tomorrow; I could be wrong, but you know what, I’ll be there watching baby. I have no position in this stock, or options, I don’t trade this anaconda over earnings, because it could just as easily have been at $600.00, and why do I want to go through that grief? Volatility was off the charts, I guess you could do a straddle, or a strangle, or something like that and really have some fun, but I would just rather trade the counter trend here. So the stock’s way down, no way I’m going to short this stock tomorrow and just watch for it to go lower, that’s just typically not what happens with these big stocks. I don’t know if the stock will bounce, and if it does how much, but I’ll definitely be watching it.
Now here’s the thing, Apple ( NASDAQ:AAPL ) is still in an uptrend, again I’m looking at $500.00. If you were looking to buy would you say, “Oh, if it gets to 498.00 I’m going to buy, or if it gets to 501.73 I’ll buy.” No, you’re going to look at it and go, “You know what if his puppy falls to $500.00 I’m in.” So I think that’s going to be a level. Now I want to mention something to you, and I’m not dogging on anybody in particular, except the guy who was on CNBC, I don’t know his name so I guess he’s no one in particular. The company gave weak guidance, and they had iPhone sales that were below estimates, so the stock tanks. So what’s this guy doing on CNBC? He’s defending it saying, well it’s cheap, well it’s cheap.
Do you know what? I was born, actually I wasn’t born in the day, I was going to say I was born in the day, but it wasn’t yesterday, but I was actually born and the night, but it wasn’t last night. People have been saying Apple ( NASDAQ:AAPL ) was cheap up here at 720.00, they’re saying it’s cheap all the way down, they’re saying that it’s cheap all the way up, and now this knucklehead is saying, “Oh, Apple’s ( NASDAQ:AAPL ) cheap here.” Don’t buy that crap, I guess I could pound the table and say it again, but here’s the point; you don’t make money on whether the company is cheap, you make money on whether the stock trades in your favor or not. When somebody’s defending this stock saying that it’s cheap, that is a loser defending his position, and there’s no other way around it. That is a loser defending his position saying why he owns the stock, oh, because it’s cheap.
If the stock was cheap at 550.00 then it’s got to be really cheap at 507.00 right? But that’s not the case; the market is in price discovery, that’s what the market does, it discovers prices. There’s an agreement in price, I forget, one of our members pointed this out to me, they mentioned this, and it was a quote by somebody and I don’t know who was, maybe it was the guy who’s saying an Apple’s cheap, but it’s an agreement about price, and a disagreement about direction. Okay, Apple ( NASDAQ:AAPL ) is trading where it’s trading, that’s the fair value, that is the fair value. When you listen to these knucklehead fundamentalists, they’re talking about the company. Dude, if you want to buy the company go get your bazillions of dollars together and go buy the company, make a low-ball offer and get it cheap. But this stock has been in an uptrend, so do you know when it’s cheap? On these pullbacks, do you know it’s a when it’s expensive? On these rallies; now, would a fundamentalist tell you that? No, they don’t know that stuff, and if they do, they’re just ignoring it.
The bottom line is, this stock is in an uptrend, and it’s now printing a lower low. This is a broken uptrend, you know we can look at it on a yearly basis and probably find a nice uptrend. You can look at it on a 5-minute basis and find a downtrend. You can find anything you want in these charts, but when I’m suggesting is, that you just use it as a function of risk management, you look at levels, if you’re long the stock and you’re taking it by the shorts, so to speak; just wherever the price opens up tomorrow is where it opens up. Don’t just rush and hurry up and sell it because you can’t take the pain. You’re going to sell this thing at like 507.00 and it’s probably even going to be up from here tomorrow morning. Do you know why? Because Apple’s ( NASDAQ:AAPL ) cheap. No, because the stock is way oversold now and it’s still Apple ( NASDAQ:AAPL ), they still have a boatload of cash, so you’ll probably see some dip buyers coming in.
So if you’re long this stock don’t sell it. If you’re long calls, and I’m sure some of you are, you like to buy them lottery tickets. If you’re long the calls, particularly out of the money, because those are the lottery tickets, you’re going to find that the implied volatility is absolutely sucked out of the price of you’re options. But, even then the stocks likely to rebound at some point. If it hasn’t rebounded in the morning then it’s not going to rebound. We should see a lot of action between about 9:31 and about 10 o’clock Eastern Time. So just watch what happens here, don’t sell it. Look for 500.00 as a potential line of support. If the stock falls below 500.00, don’t catch that falling knife just let it go.
Also, one other thing on quote, “cheap”, again, that’s the argument that losers make. Amazon ( NASDAQ:AMZN ), is this cheap, 386.00, is it expensive? Do you know what the P/E of Amazon ( NASDAQ:AMZN ) is? Just go to Yahoo Finance and look it up; it’s 1400.00. This company has never booked a profit; now they make boatloads of money, but they just reinvest back in to their businesses. This company has never made a profit in its entire existence, never. This is what the stock looks like. Now was cheap back here? You know what? By this guys metric it was expensive, too expensive to buy at $1.70. Now it’s up at 386.00, I’m sure it’s still too expensive to buy. So the point is, don’t pay attention to the fundamentals, pay attention to the technicals, and is it that easy? It pretty much is.