Apple: The Daily Commentary

9:50 AM — Technology looks pretty strong today and Apple looks like it’s ready to test it’s first line of resistance at $320. Here’s something I wouldn’t be shocked to see happen. We’re seeing the $VIX come off as indicated on the SPY daily commentary right. There’s a whole host of bottoming indicators in the market. Apple got down as low as $310. Everyone expects Apple to see $300 or $280 this summer. Those are both huge points of support and it makes sense for the stock to at least test psychological support.

But at the same time, the market often-times doesn’t make things this easy. For example, in January 2008 – February 2008 correction, we saw a lot of people waiting to buy Apple at the $100 mark and $90 a share mark. That was the “technical support” at the time. The lowest they got was $115 on an interday basis. In August of 2007, after Apple reached a high of $148 off of July earnings, we saw a big summer correction. Everyone expected Apple to retest $100 a share — as that made a lot of sense at the time — it only reached a low of $111.50. I remember this distinctly, because I actually picked up a ton of short-term options in that $111 -range.

So what i’m getting to here is this. It’s very possible that Apple bottomed at $310. The reason I say this is simply because the market isn’t going to make things this easy for everyone. The two logical places for Apple to go are $300 and $280. Is that going to happen? I think highly unlikely. Either Apple will not make it to $300, or fall below it to 290 and trick everyone who wants to buy at $280. Or scare the living shit out of everyone and let it fall below $280 pissing off basically everyone. I think those are the different ways to see this. I don’t think it’s going to be an obvious, “ok everyone, we’re at $300 support, lets all buy and get rich” type of thing. Time will tell.

10:42 AM — Major accumulation of Apple today off of the FBN securities upgrade. Here is where Apple stands today in relation to the beginning of June. June has been one horrific month for the stock. It opened the month near $350 and has gotten as low at $310 — that’s a $40 point loss or more than 10%. Yesterday, the stock fell out of it’s lower-trend line of the June downward channel. It has since broken back into the channel. Once Apple breaks the upper-trend line, you’ll probably get a retest of $335.00 pretty quickly. See here:

11:32 AM — Apple is bumping against it’s first major resistance here. It’s testing the upper-trend line of it’s June downtrend. A break above that channel can potentially catapult the stock higher. A break above the trend-line probably suggests a move to $335.00. See below:

11:39 AM — Today is now considered a major accumulation day. The market has bottomed on countless number of occasions on major accumulation days. I’ll now be looking to buy pullbacks in portfolios. Click here.

3:00 PM — Ok this is looking very strong. Recently, we’ve seen this same move in Apple before end in failure the monday before the developers conference. But given the accumulation, I think the evidence is getting more compelling that we’ve bottomed. That we’re going to see a major rally in July. Here’s why. We have major accumulation, an all-day buy day, and Apple has broken slightly above the upper trend line. Moreover, this confidence vote in Greece is a climax resolution to a problem for the broader market.

Now this doesn’t mean that we have a full v-recovery underway off of this correction. Instead, it means that the correction could be nearing an end and that after a retest pull-back, this market can be in rally mode. Now everything is very over-extended on the hourly chart. The QQQ and the SPY are both very over-extended. The SPY is more over-extended than it has been since early February. That’s nearly 5-months ago. This over-extended indicator I look at has a +90% win rate. Meaning, if you short when the market is over-extended or go long when the market is over-sold based on this indicator, you generally win 90% of the time. What I mean by win, is you will be able to either cover a short or sell a long position for a win within a few days.

So at this point, I’ll be buying pull-backs in the Bullish Cross model portfolio. Notice that in this portfolio, we’ve taken a position in Apple at $312.50 and at $320.30 on the QQQ at $53.88 and on Caterpillar (CAT) at $95.83. All are up quite substantially. On CAT, we’re already up 6.0%. This model portfolio is going to do a great job versus the market. If I was running a hedge fund, this portfolio is probably what I would be doing for the main capital 75%. The SPY model and the Apple Investment thesis model would probably account for 25%. Here’s where Apple stands right now. Notice it has broken its upper trend-line:

30 Responses to Apple: The Daily Commentary

  1. I think AAPL fooled everyone by taking out the 200 MA and 320 in back to back days. It might have bottomed at 310 but I was shocked it got below 320. At this point I’m not sure about AAPL anymore and I’m worried we all have “Apple colored glasses on” and can’t see that the stock is simply stuck regardless of any valuation metric.

    • It’s not the case. In fact, your comment there tells me pretty much we’re nearing a bottom. Once people start to abandon logic and reason, it says we’re capitulating. Everyone is “giving up” so to speak. I’ve seen far worse correction than this. This correction is a joke in the grand scheme of things.

    • Basically, what I’m telling you is this. The market will get everyone to think that near-term. You think you have your doubts now. I couldn’t convince many bulls that Apple would more than triple in value in 2-years at the bottom of the financial crisis. I had real big Apple bulls snort-milk out of their nose laugh at me. The volatility creates doubt. You just have to remember that fundamentals over the long-term is where things count.

      So maybe it’s valued well today, it may not be tomorrow, but over the next 18 months, you can be pretty damn sure there will be a strong valuation somewhere during that period of time.

  2. I certainly hope so. I have not sold anything and probably won’t but from an emotional perspective I have “given up”. Hopefully my emotion called the bottom!

  3. Hi Andy,
    First, congrats on your upcoming boys! Hope everything is going well.
    I was wondering if you think that this bouce today should be sold. In particular, I have some short term call options (July & October) which I would like to get out of as I am down about 50% in both.
    Thanks!

    • Mastaka — Thanks for the congrats! Short-term is so much harder to really be able to give a firm conclusion on. When it comes to companies with good fundamentals and that are undervalued, the best way to capitalize on it is by taking a long-term perspective. The short-term trading of Apple has little to do with it’s fundamentals or valuation. So it’s difficult to make such predictions.

      There are so many arguments to be made for the thesis that this correction has seen at the very least a near-term bottom and that we’re going to be getting a very big bounce — or we’re actually in the middle of one.

      But there are also plenty of good arguments on the side that says we’re going to at least see a retest of the lows. Like you have to look at all of that evidence and draw a conclusion as to what you want to do with your position.

      Even if I told you, this market has legs, it wouldn’t matter because that’s just one piece of evidence. This could be an oversold bounce only or it could be the start of something bigger. This is why short-term options carry with it the most complex investment thesis. There are so many variables to consider. Like for example, we know Apple tends to rally in the second half of the year starting in July. But whether that will be good enough for your October options who knows.

      This bounce in Apple is not surprising in that the stock has been oversold on the 60-min for the entire month of June. I can’t give personal advice on the options issue. I’m prohibited from doing so. I can only comment on the direction of the market as it see it in front of me.

  4. hey same boat mastaka .

  5. Hi Andy, I want to add more in aapl but not sure if the tables are turned yet. Where do you think we should initiate new positions?

    • Think of things this way. I can only present evidence to you for direction and can show you what I’m doing without telling you to follow me. Yesterday in the model portfolio I bought Apple at $312.50. I don’t know how much more clear I can make things without saying, “hey everyone, buy Apple now.”

      I really want to be able to say that, but the powers that be say I can only say “here’s what I’m doing, and here’s where Apple is head.”

  6. Hope your family is doing well. They will grow like Apple!!

  7. nikolaihoffn

    Best wishes to you and your wife (and the newbies)

  8. Hi Andy. Congrats on the twins. I am late to the Apple party and bought shares in the 340-350. Theoretically speaking, what is the best way for an investor with only a few thousand to invest to maximize their position right now if they are long Apple? Thx!

  9. Andy, I don’t want to step on your toes here because I do appreciate your perspective about Apple and the market, but in considering whether it is worthwhile to pay $300 for the investment report/webpage, would it be possible to get some non-specific reviews from users that purchased it. Whether they are satisfied with the product and would recommend others purchase it?

    • Ask around. The overwhelming majority >90% of monthly subscribers also subscribe to the investment report. I’ll eventually be able to do this in a more organized way, but I have to get to things in order of priority and site promotion is near the bottom of that of that list. Only because there is so much damn material that I need to get up onto the site.

  10. dtfein – thumbs up review from me (on report).

  11. A sample of the (old) report will be a good idea, at least we will know what we will be getting! Just a thought!

    • I will be doing that. You have to remember, this site just launched a week ago. So this is the first report. Once the purpose of this report has been fulfilled, I’ll be publishing it to the open public and you can review all you like.

  12. Would be great to get over the 200 ema on the daily today at $326.55. Can it be done today?

  13. Andy, given your focus and expertise on Apple, could you give me an idea of what % of your/a portfolio you are comfortable committing to various Apple trades. I have always looked toward diversification but I do feel like Apple deserves a significant stake in my portfolio.

    • The best way to use Bullish Cross is to read the whole site. The answer to that question lies in an entire offering that is included in your subscription. Read all of the contents in the nav bar. There are so many different benefits to doing that. You don’t need to read all of the articles, just read about each page. Your answer is there. You’ll gain a lot from doing this. Bullish Cross has an entire model portfolio. A full-on developing portfolio. Over the past three days, we’ve purchased Apple, the QQQ and CAT. We’ll be adding more positions.

  14. any when you comment ” after a retest pull-back, this market can be in rally mode.” Are you talking also about apple to res test the pullback too ? to what level . as of now we are tradying at 325 .

    • Oh. So a retest is an attempt to take out the lows. It doesn’t have to go all the way down, but say we get down to $318-$320 and then rally again. That’s a retest.

  15. you said: ” If I was running a hedge fund, this portfolio is probably what I would be doing for the main capital 75%. The SPY model and the Apple Investment thesis model would probably account for 25%”

    what exact % would you allocate? would it be like 75% bullcross, 12.5% Apple, 12.5% SPY?

    • Something like that. The idea here is, these portfolios are entirely separate. It’s all about allocation. They are three entirely separate and unrelated models.

  16. Message to Coopie — I’ve moved your message to the investment report side, and answered it there.

  17. ok, i will repost the question. but where? the Investment area entitled “Apple: The Easiest 500% Gainer in Years” contains many different sections. Some appear to have comments and some don’t.

    also, i would like to discuss the idea of your hedge fund thesis mentioned above. what area is appropriate for this conversation?

    • Oh. SO that was hypothetical. That was just giving an example of what I would do if I were running a fund.