The expected move was pretty much inline with what the options said, $30-40$ up or down but it looks like sentiment is taking it down a notch further, i would not be surprised to see a probe under $500 tomorrow. I find it somewhat amusing that this company is a total cash machine, making money hand over fist and very cheap but i am guessing a considerable chunk of holders are growth investors and exiting to find other hot plays – either way Apple is a great momentum stock ( look at the runs from 700$ to 390$ and 390$ back to 570$ )…so i am just waiting for things to settle a bit before taking my next move.
On a more fundamental side, I assume this transition from growth to valuation is why the price is all over the place no matter what the current valuation is, just need to take advantage of the extremes. I’m expecting these fluctuations to get ‘less’ as time goes on.
I am still long calls on Apple which are out several months, they’ll get clobbered tomorrow but i expect the stock to stabilize somewhere in around the $480 market as shown in the chart below..
I think at that point it will make a stance and begin the ascent back up towards the next apple event and the turn could be especially rapid with rumour mills in full swing for innovative products and so on. The buybacks, dividend and valuation should put a floor on this stock. This is all of course making an assumption that the broad market doesn’t go to hell in a hand basket..
I would NOT be surprised to see this stock take $600 at the end of 2014 especially with Cook’s comments on China. Only 16 stores but rapidly going to 300 this year? Sounds promising to me. If we do get a new and cool product line then that will be the catalyst that will grease the momentum gears again.
So I’m looking for a retest of the low on the S&P that we put in earlier today ( 1767 approx ) sometime soon…and i’d like to think it will hold but there is a lot of confluence a bit further down as you can see in this chart..
We’re also a long way from the 200 on the S&P which is a little unfortunate…the price will correct to it or we’ll trade sideways until the technicals ‘reset’ to something more reasonable…the main trend is intact so my bias is still long.
If the January barometer is any indication ( see the stock trader’s almanac for further details ) then this year is likely to be sideways and choppy so 5% below and 5% above 1800? Perhaps..