MODEL PORTFOLIOS CURRENT POSITIONS
1. The Bullish Cross Apple Model Portfolio
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2. The Bullish Cross SPY Model Portfolio
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3. The Bullish Cross Long-Term Portfolio
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4. The Apple Common Stock Model Portfolio
1. Apple Long-Term Position: 1,175 shares x $451.71 = $530,759.25
2. Apple Trading Position: None.
Cash = $588,326.90
KEY POSITIONS ON WATCH
Positions “On Watch” are those positions which we are considering. It doesn’t mean we are taking these positions for sure. We are just entertaining the idea.
1. The Bullish Cross Apple Model Portfolio
2. The Bullish Cross SPY Model Portfolio
3. The Bullish Cross Long-Term Portfolio
4. The Apple Common Stock Model Portfolio
THE LIVE BLOG 9:30 AM – 4:00 PM
6:42 PM — I’m not going to be publishing a BC Weekly Summary this week as I’m pretty sick right now. The whole house has the flu pretty bad right now. I’m going to keep very brief and to the point. Please just try to see through all of the bullshit. There are like 1000 cooks in the kitchen right now. I’m going to highlight what I think is very important right now. Take it or leave it. That’s all I can really say. I can’t combat every idiotic notion that posted all over the planet. And certain not today in the condition I’m in. So here it goes. In bullet point form:
1. Forecasting Apple’s Earnings
I’ve been forecasting Apple’s quarters since 2004. Sometimes quite accurately and sometimes not. There was a stretch of like 7 quarters where I nailed EPS on the penny. But as Apple became larger and more diversified, it has become more difficult to forecast. Here’s the simple truth when it comes to Apple’s quarters. Some are extremely difficult to forecast given the factors of the quarter and some are easier.
Those quarters where Apple’s fate is determined not by how much Apple is able to supply the chain but by how fast end-users are purchasing Apple’s phones are by far the most difficult quarter’s to forecast. This is especially the case when Apple intentionally allows its channel to draw down ahead of a product refresh. Especially in a quarter like this past one where they gave no fucking hint whatsoever that a new iPad 4 is coming and allowed the iPad 3 to drawdown intentionally which likely caused some pressure on the iPad overall. That and the expectation for an iPad mini causing consumers to hold-off buying the iPad 3 in an effort to buy the iPad Mini in stead.
Ok. Whatever. We’re getting off the point. The point here is this. There are going to quarters where it is easy as hell to forecast what Apple is going to earn — or at least forecast the scenarios — and there are quarters where it is quite difficult. We explained at the outset of last quarter that Q4 would be one of the most difficult to forecast. An iPad refresh made it even worse.
The point I’m making is, don’t just think that every quarter is like that. There are quarters where Apple telegraphs quite clearly to us that it intends to increase its channel to a certain degree on the quarter and that the demand on the end-user side is currently higher than supply. When that is the case, it has been easy as hell to forecast Apple’s earnings. Go back and read the BC Live on the day Apple report Q1 2012 earnings. With last minute analysis, I was able to forecast to the precise dot how many iPhones and iPads Apple would sell on the quarter as well as the revenue number. That was to the dot. 37 million iPHones and $46 billion in revenue was suggested. Go back and see for yourself.
Q2 was also not a particular difficult quarter to forecast. Q3 shouldn’t have been but slack in end-user demand made it such. Q4 is always going to be a pain in the ass. Alright. The point is this. You can either listen to me about next year or don’t. I don’t care. Do you whatever you want. I’m just telling you right now, it doesn’t take a genius to figure out what is going to happen in 2013. I just don’t have as much confidence in humanity as others do. But it really doesn’t take a genius. This shit isn’t that difficult.
In 2013, we’re going to see margins gets squeeze in Apple’s fiscal Q1 2013 earning as a result of a new form factor in the iPhone 5. This has always been the case. ALWAYS BEEN THE CASE. I know some have tried to make a different argument, it is plainly and totally wrong. What you see historically with Apple’s gross margins is this. The quarter Apple introduces a completely new form factor, gross margins get hammered. We saw this on the transition from the iPhone 3GS to the iPhone 4 as Apple peaked in its expense cycle just as they noted in the Q4 conference call. Do you know what has happen after gross margins crashed between the 3GS and the iPhone 4 quarters? They went straight up. Do you know when Apple enjoyed its peak? During Q1 and Q2 of 2012. Why? Because the iPhone 4S wasn’t a new form factor. It was old technology. They were getting the most favorable margins at that point in time. As they reduced channel and made large scale purchases ahead of the production of the iPhone 5, margins peaked in Q2 2012. It declined in Q3, Q4 and Q1 will represented the lowest point of the curve.
But guess what!? After Q1 2013, gross margins will go up every single quarter on a consecutive basis until Q1 and Q2 of 2014. And do you know what’s going to happen then? Please analyze every word I’m saying here because I swear to you this is the most important information you will get about Apple’s future right now. Apple’s gross margins are going to skyrocket on Q1 2014. Apple knows this now and they will telegraph this in the Q4 2013 conference call.
Now why is this so extremely important? Well because consider this. Q1 2014 will not only have much much higher margins than Q1 2013, it will have significantly larger revenue. And do what you know what happens when that happens? You get a skyrocketing TTM. Here’s why. 1% in gross margin can mean the difference of Apple earnings $16.50 in EPS this quarter and $17.90 in EPS. That’s how dramatic 1% in gross margins is. It’s a huge difference. Why? Because Apple’s operating expenses aren’t growing as fast as revenues. Meaning it’s operating margins are increasing by the quarter. We can have a situation where gross margins come in near 38.5 to 40% in Q1 2013 and come in at 47% in Q1 2014. Do you know what that will do to TTM? We could have a scenario where Apple reports $17 in EPS this quarter and $29 in EPS in Q1 2014. Now why is that such a big deal? Because a lot of that will be built into the stock price ahead of time because this will be telegraphed not only by the recent rise in margins during Q3 and Q4 of 2013, but by Apple’s guidance. If Apple were to report $29 in EPS, you know they’re going to guide for like $22 or there about. That right there just on a 15 P/E ratio assuming no beat on earnings is worth an automatic increase in value of $75. On a 12 P/E, it would be a $60 increase in PPS. And that’s just based on an assumption that Apple won’t beat its own earnings.
So let me add a little extra color to what will transpire. We will probably see something like $62 to $63 in EPS in next year. Maybe a little higher. It really depends on how margins recovery during the expansion phase of the product cycle. I know this to be the case, and I’ve had a long conversation with Horace about it, and he is even far more optimistic than I am about it.
Now here’s why I think this could translate to $1000 a share price value. If Apple is sitting at a $63 TTM or even $64 TTM in October of next year and we just got guidance that that the TTM according to Apple will set to rise to $68 to $69 at least — assuming no beat at all — and with the assumption of a beat, maybe perhaps as high at $73 to $75 after the report, do the math. I will flesh this out when I’m not feel this under the weather. Just read between the damn lines. Read the conference call. Go back and look at how margins changed with the launch of the iPhone 4 and iPhone 4S. Don’t go too far back because back then the iPod was still the most dominate contributor to revenue. It will just screw you up. Start using your mind here. I’ll get to this eventually. Until then, the answers are clearly right in front you.
A $73 to $75 TTM assumption x a 13 P/E = $950 to $975. You think if Apple has a year like that, they will trade it at 13? What you are seeing with the stock right now is a rare occurrence. But back to the point of forecasting earnings.
Like I said. Q3 and Q4 are hard quarters to forecast. There are quarters where you will see Apple beat its top-line by 20% or more and there will be quarters where Apple might fall short or miss as a result of underestimating the amount of slack on the consumer side of the equation. In quarters like this one, Apple’s guidance is the most important thing to listen to. And those who don’t, will get burned. I almost can’t wait for Apple to report because I’m going to be very much right about this. This quarter will be a big beat quarter. Q2 will also likely be a big beat quarter. We will see about Q3 and Q4 of 2013. There is another theory in the works that could suggest that Q3 could end-up being every strong like 2011. I’ll get into that later. I’ll post my estimates for Q1 later. I posted it right after the results. The suggestion I took from Apple and my initial analysis suggests $62 billion in revenues and around $16.85 in EPS this quarter.
2. Apple’s Rebound
On Thursday evening, I posted that Apple had never seen a more perfect set-up for a bottom ever in its history. It was much different than Tuesday or Wednesday. I know that at least a very significant portion of you think its the same technical set-up every day. It’s not. Not by a long shot. Like I said on Thursday. We only had four set-ups on this correction for a bottom. The first was when Apple triple bottomed at $623. It rebounded to $652 and then failed. It was over. A great shot, but it didn’t work. W-recovery failed. That didn’t mean the technicals didn’t work. They worked just fine. It’s that the set-up didn’t unfold. For the set-up to unfold, Apple needed to breakout above $650. As in rally to $660 a share and move higher. Without that, there is no set-up. Technicals failing would be Apple rebounding to $652, pushing to $663 a share and then collapsing back down. That would be technicals failing. Because the upside target on breakout would be $680. Falling short of that would mean technicals didn’t work.
The technicals have worked perfectly fine in this correction. If you say, “technicals didn’t work,” it just means you don’t have a damn clue as to what the hell you are talking about. That’s the simple truth. Because you it means you can’t grasp the difference between a set-up not unfolding and “technicals failing.”
The second set-up we had that didn’t get follow through was the bullish engulfing candlestick we had down near the $609 level. If you remember, on a Friday in October, Apple fell $22 from $631 down to $609 a share. The following Monday, it rebounded up to $635 to completely erase Friday’s losses in a bullish engulfing candlestick. That looked extremely promising. The problem is, you need follow through. The technicals didn’t fail when there was no follow through. There is no technical rule that says a bullish engulfing candlestick = 100% certainty of a bottom and that a rally will ensue. It’s just a good start. Technicals failing would be to see $30 of follow through and then Apple collapsing.
The third set-up we had was on last Friday when I published that report. That was a great set-up which lead to a brief bounce on Monday and then got sold into leading Apple to become oversold. So why was there no set-up on Tuesday, or Wednesday? It’s simple. On Tuesday and Wednesday, Apple merely just worked off the rebound it had on Monday. There was no -30M Chaikin Oscillator set-up on Tuesday or Wednesday and Apple didn’t fall far under a 30 RSI then. We also didn’t see Apple collapse under the lower b-band. Or the other long list of indicators that propped up on Thursday.
Now Thursday’s set-up — the fourth we’ve seen in this correction — is very powerful. This one is the most powerful set-up for a technical bottom we had ever seen in Apple’s recent history. I haven’t seen Apple close $12.00 below its lower b-band, at a -30M Chaikin oscillator down $50 under the 200-day at 12 P/E ratio and at a 23 RSI. Not to mention at a 13 RSI on the 7-day and a 19 RSI on the 60M chart.
All of that is huge. All of that individually would be very strong reasons for a big bounce. That and the fact that Apple was at major support back near the May lows. Now if you want to attribute the bounce to Doug Kass saying that he’s buying or some other fundamental event, go for it. See how that will work for you in the future next time we have this technical set-up and you don’t see it coming because you are too pre-occupied looking for a firm fundamental reason. Has anyone sat back to think that maybe the “improving fundamentals” or the better sentiment you saw on Friday was the result of the bounce and not vice-versa? Look at what I have said at the end of every BC Live each session for the past few weeks. Do I sit there and give such high conviction after every session that the low is in or that the next day will be a huge rebound? Nope. After Friday, November 2, 2012 I did because it was an excellent set-up. So there was good conviction then. I also had strong conviction on the $623 double-triple bottom set-up and on the bullish engulfing candlestick. But not on every session. Here’s what i wrote on Friday morning when Apple was trending flat:
6:01 AM — As we explained yesterday, Thursday’s session is the best set-up for a bottom that we’ve ever seen. Not just in this correction, but in any recent Apple correction. It had everything going for it. Even far more than what we had going for it last Friday. I know it’s difficult to believe given how bad the selling has been this week, but what you need to understand is that Monday – Wednesday, we didn’t have a set-up of any kind. Thursday we did. Last Friday we did.
Now why am I pointing this out? Because I want to be clear that Thursday was not just another ordinary sell-off day. It was a huge technical set-up far more powerful than any other previous day in this correction. We had everything you could have possibly wanted. Now why do you want this to be technically driven? Because technically speaking, Apple should rebound up to $630-$640 in short-order. That’s why.
Just to give you an idea of how dramatic the sell-off was on Thursday and the set-up we had, Apple was so f’d up that even with Friday’s bounce, we didn’t even alleviate the extreme conditions. Apple is still at a -30M Chaikin Oscillator. Why is that so important? Because as I explained many times before, the Chaikin Oscillator is quite possibly most reliable short-term indicator there is for Apple and the markets for that matter. In every single down-leg in this sell-off, anytime Apple reached a -4M Chaikin Oscillator on the 60M Chart, the stock had an IMMEDIATE rebound of 8-12 hourly bars in the green normally for $20-$30. Every time. And it was within 1-hour. We hit -4M at the close of one hour. And it was like clockwork. Next 8-12 hours = $20 to $30 rebound. Every time. You know that bullish engulfing candlestick or that $623 triple-bottom set-ups? Where were we ahead of those? At -4M Chaikin Oscillator. That’s where we closed both instances.
Now why is that significant? Because Apple at a -30M Chaikin Oscillator on the daily chart is exactly like it being at a -4M Chaikin Oscillator on the hourly. It’s the same sort of equivalent set-up. Don’t you find it odd that the very first day Apple finally reaches -30M on the daily we get a rebound? Except this time instead of it being 8-12 hourly bars in the green, we could very well be setting up to see 8-12 daily bars in the green for Apple. Maybe 1-2 small red ones in-between. Just keep that in mind. See below:
Now before I get more into the technicals again, you really should notice how extreme this all really is. Even with the size of Friday’s rebound, Apple still not even able to move the daily Chaikin Oscillator from -30M. I don’t even know how to relate how extremely positive that is for the bulls. It’s positive because it means for the first damn time in this correction, a rebound hasn’t screwed the oversold condition. It means, we are no better off than we were on Thursday. We well a little. On Thursday, Apple closed -$12 under its lower b-band. That was too freaking extreme. But a -30M Chaikin Oscillator even though we closed up $10 on Friday? That’s huge.
Ok. I’m going to sidetrack for a little bit and offer up a theory for what I think might be going on. Now this has no basis or evidence beyond the circumstances of this correction itself. And the size of it and the utter fear I sense in the seller of this correction. This is just a theory.
I’m a man of evidence. I don’t really care so much for unsubstantiated theories. But something tells me this one might be what’s at play here and because of that, I think we may see a push to $700 a share by January. I’ll explain it all in a moment.
I think a major maker screwed up badly by selling Apple January spreads without hedging out their positions. I think what they thought was this. “All I have to do is simply tank Apple far enough to get people really freaked out which will in turn sell their options and allow us to recoup the expense and generate a gain on the rebound.”
Think about it. If you decide to buy the $655 – $705 spread and a market maker sells you that spread without hedging the bet on the notion that you will eventually sell that spread below par — either back to him or to someone else — the market maker has made up once he alleviates himself of the obligation. All he needs to do is buy them back. But from whom? If he buys them back from another market maker, than they are screwed. It is important that you and I sell that spread to them down here. If we don’t then there could be a situation — this is only a theory — where a MM might blow up.
I don’t think MM’s expected anyone to be holding the $600 – $650′s or $655 – $705 for so long and so it seems that they may have double-downed on their bet by pushing Apple down under $600 a share. But unless the holders of the $655 – $705 capitulate, they could end-up getting royally fucked in a huge way.
Here’s why. Market makers aren’t the only market participants here. Notice this sell-fof was done on low volume. Until this recent slide down here, it was done on lower volume. I think the recent volume might be the result of some other players having to sell as a result of reaching risk-limits in an individual name. Once an individual name goes down by a certain amount, they are forced to sell even though they might believe in the name and then buy it back later once things have stabilized. But again, this is only a theory.
But getting back to the point at hand, the biggest risk a market maker takes by manipulating a stock price down is that it could attract buyers. Think of a group of hyenas killing a wilder beast out in an open field. If it doesn’t do the kill quickly and quietly, it could end-up attracting Lions. And if male lions show up, they’re screwed. Not the best analogy here. But work with me here.
If a market maker sold everyone the $655 -$705 spreads, didn’t hedge out the positions and wanted to get you to sell them at a cheap price, they would do so by creating volatility. The thing about humans is that they’re all the same when it comes to fear and greed. People are more likely to sell when they are looking down the barrel of a shotgun than they are when they are looking a new private jet. That’s a fact.
So big MM just needs to shake things up. All we have to do is sell Apple off down to $600 and that will do it. But to the MM’s absolute horror, no one is selling their $655 – $705′s. WTF is going on they ask. If this theory is true, I probably should flee to South America or something.
Because think about it. What if they shake things up and no one sells. They badly need people to sell those positions at a loss. So what do they do? What can they do? Well they could give up the battle and eat the losses. What if the losses are really too great? Then what?
Well then maybe let’s double down. Let’s do something that no one would ever expect. Let’s take it down to the $500′s and push those spreads down to -80%. At that point, people will capitulate for sure. I’m sure right now, there is a lot of WTFs going around.
But why is this really dangerous for MMs? Because by driving the price down to $550 a share, it could attract huge buyers. Buyers with far more fire power than MMs. Look at the volume. Volume is two-sided. They are selling to someone. And the selling is probably MMs. MMs selling directly to big buyers.
Notice that none of this type of manipulation would work with the uptick rule. Not at all. If the uptick rule was in place, Apple would be trading at around $835 right now or higher. And we wouldn’t see such dramatic 18-20% corrections. But do you know why it exists? Because everyone but you and me benefits. And I mean everyone. Funds can buy at the bid. Market makers and sell at the bid. Stocks can get driven down and option premiums can get man-handled. But let’s get back to this theory.
So here is my theory. I think MM’s went too far here. And I think they are now realizing that they are screwed. It wouldn’t surprise me to find out there was a lot of call buying recently. I wouldn’t surprise me if MM’s take this up big time. I think you could end up with a scenario where you see Apple skyrocket on no volume. Why? Because MMs are doing most of the selling to begin with. So when a fund wants to buy a chunk of Apple, they are typically buying directly from an MM. The MM then hedges out the position. Either with a naked short position or with options. The point is to create a market.
But if you are a MM in this situation, the only thing you can really hope for is this. (1) People will sell their $655 – $705 spreads on a bounce which will not only make it a gain for the MMs, but will put upside pressure on the stock; and (2) by no offering liquidity when it is asked for, the stock can end-up taking off on light volume.
Firm A decide they want to buy $200M worth of Apple, and that $200M position causes the stock to take off because MMs don’t sell to them. They buy at open market. The stock can uncontrollably go into a v-recovery. We can see the opposite of what we just witnessed between September and early November. Last 7-weeks.
Now here is how I think Apple will and can push way through $700 by January. I think what will happen is we will get a technically induced bounce up to $620 to $630 a share. I think that will cause a lot of people to first kiss floor, praise their God (if any) and then sell their spreads at either even or at a 30% or so loss. Which by the way, given what we know about next year, is no big deal. You would be essentially moving out of this Jan and into next Jan. You should just forfeit this year. And this sell-off has produced huge opportunity for next year.
But that selling will cause a tremendous amount of upside pressure by MM’s. First, they will be either closing out positions that they opened in the first or they will then have a vested interest to for Apple to close in the money. They also are going to have to cover all of that shorting they did to push the stock down so hard in this first place.
This is a very good theory. I think if Apple rebounds up to $620 to $630 a share, gets overbought and the premiums become reasonably valued and everyone at BC exited those spreads, I think we would end-up seeing Apple close well above $700 at expiration. That’s because under this theory, MMs would have a vested interest. You would start to see positive news flow, positive sentiment, MMs will lighten up huge on the liquidity making any small buyer push the stock higher. It will also step in and buy up any heavy selling.
Now notice that this is just a theory not founded in evidence. It’s founded in reason. And it explains everything very well. If you are a market maker and have sold millions of dollars of un-hedged positions on the expectations that a small sell-off down to $600 would rattle everyone out of their positions, and if that failed unexpectedly, I think panic by selling Apple down under $600 makes a lot of sense. And I think the extra volume as a result of risk-limits being reached and a blow-up of a brokerage firm along with the failure of the 200-day moving average and fear may account for the rest. Now that things have reached a technical extreme of magnitude and people are still sitting there holding tight, I think we may have just given the MM’s the hugest middle finger in the history of man kind. The minute we sell at $630 on the bounce, they will do so right back at us.
If we held through a rebound up to $700 a share as big buyers step in to buy Apple so undervalued, and if you hear of a market maker going belly-up or or some market maker taking some huge hit on Apple as a result of this, well then you have your culprit. And i think it would prove this theory correct.
Now theory aside, I do think the one thing that is true is this. If we sell our $655 – $705 spreads at $630 to $650 a share on the rebound, then we will see Apple get up to $705 a share. Enough people sell that spread, we will see the stock rebound.
You know, if you go back to the March short-trade that failed based on the extreme Chaikin Oscillator situation, did you know that all of our puts expired deep in the money. Did you know that? All of them. ALL OF THEM. All of the May puts and April puts. Do you know why? Because you sold them to market makers. Who the hell do you think is buying? Do you think they’re saying, “hey Mr. BC Subscriber, go ahead and sell me your put and I’ll give you $5 million and take the loss for you?” I mean think about it man. Who the fuck is buying the $655 – $705 spreads down here.
Do you think if I said, “hey everyone, sell sell sell, that it’s some dude across the country buying at $3.00 a contract?” NO!!! It’s a market maker. And do you think they’re in this to lose their ass? The minute I issue a sell on that spread is the minute Apple rallies to $705 a share.
That’s one thing that I’m certain of. Aside of this theory, the minute we all sell our spreads, Apple will rally to $705 a share. Right now, it’s a battle between MM’s and the rest of the market. If big players decide to step in and buy Apple given the extremely stupid cheap valuation, we could end-up getting there anyways. But you need to understand who you are selling to.
Think about it. There aren’t thousands of people out there waiting to buy the $655 – $705 or the $600 – $650 spread. When you sell those spreads, you are selling them to a MM. If those are open positions, they would be incentivized for Apple to rally up to $705 a share. There would be no one against it. So it is a delicate balancing act that we will have to play in the ensuing weeks.
Now here are a few more points to make. First, Apple could end-up having a second leg down. But I doubt if it did so, that it would make new lows. I think we could see a bounce and then a re-test of the lows and then a big rally between the end of November and January. That’s a distinct possibility. But it doesn’t have to happen that way.
Another thing to understand about sell-offs is that the rebounds are generally equal and opposite in energy. Because this sell-off was so sharp, the rebound will be equally as sharp. I would say that Friday was just a range day. It was nothing compared to what the actual rebound — whenever it comes — will look like. I’m talking multiple +$20 and +$30 and maybe even +40 or +60 days. Days where Apple is up $40 in one day for no reason at all. The press and A.S. will always point it to a fundamental reason. They will find one. Some no-named analyst in some tucked away village in the world has issued a buy rating. The Chief of the Masai in Kenya has raised his iPhone estimates from 41 million to 41.1 million and that is why Apple is up $40. Just like on Friday Apple was up $10.00 because Doug Kass decided to buy. Doug Kass also decided to start buying at $590. Did that cause a $10.00 rally? Oh yeah what I said on Thursday about the best technical set-up was nonsense.
But this v-shaped rebound will be significant. Don’t be shocked to see Apple rebound through $600 this week. It can very easily happen. The 50% retracement which is generally the first target to hit on the initial rebound is $617 a share for this sell-off. That would be the initial bounce. The mid b-band is $601 for godsake! Here’s what I think we could see:
Finally, I want to point out something important. If you bought the $655 – $705 spread at $20, you just need Apple to end the year at $675. It doesn’t need to get up to $705. Right now, because of how extraordinary the situation is, we should be modeling a plan for moving away from January and into next year. Forget about April. April could end up being just as bad. Remember, once Apple reports earnings, it’s TTM will rise to $47.15 at best. At a 13 P/E, that is still $613 a share. The stock will see a bigger correction down to the $613 level after it reports January earnings. We still have the up range to go and we will have an upper end of the range on valuation in April as well. But what I’m saying is that we will talk about that more later. For the time being, just keep in mind that Apple is still very oversold even with the rebound we had on Friday. And expect the recovery to be somewhat as strong as the sell-off. So I expect to see $600 a lot sooner than many believe. At $650 a share, which is $100 above where we are now, would push the $655 – $705 spread to significant levels. Probably up to $20+. They’re not going to give people a 10-bagger for calling a $50.00 move in Apple in a month. Sorry. It’s just not going to happen. So $650 by mid-December is what you want to be looking for. If there is anything that Apple has shown us is that it can easily do that in 10-sessions. We don’t until mid-December. Hell, Apple rallied from $355 on October 4, 2011 up to $425 a share two-weeks later. It fell from $422 in September 20 down to $355 on October 4 and then recovered those points back within two weeks. It can do a hundo up here easy.
2:00 PM — Sorry about today. I’m totally bedridden with the flu. Just read the technical outlook I’ve post above and most cases you will get today’s action with or without me. We explained it on Friday and a little today. I’m sure there are 80% of your scratching their heads and 20% realizing that “lo and behold” there is a such thing called a re-test? I’ve never heared of a re-test. What is a re-test? I’ve been at bullish cross for 18-month and the term “re-test” has been published maybe 10,871 times but term eludes me and still can’t recognize it when it happens. I’m barely able to quasi open one eye lid with about 3.2% of my brain power active to realize today is a re-test of the lows. Look after a sell-off of the magnitude Apple had, it’s going to re-test the lows. And probably early. All you want to see is (1) Apple hold its ground, and (2) Apple make new highs above Friday’s highs or this morning’s highs. Just be patient. Apple still very oversold. Rebound will ensue soon enough.
2:41 PM — By the way, the daily Chaikin Oscillator is still hanging around down there near 29/30. So that’s good news. This is different than last week. It’s not the same set-up. This is a different. So just relax today and be patient. That’s all I can really say. Let this play out the way it will play out.
By the way, after we through this, I thought it about long over the weekend and I am going to turn Bullish Cross into a pure research publication. Meaning, I’m no longer going to hand people the conclusion on a silver platter. I’m going to do the research, publish the findings and it will be up to you to read it. That means, on days like Thursday, I will say (1) Apple has reached a 30 Chaikin Oscillator on the daily chart. It has happened 9 times in the past. In all 9 cases, it has meant a precise bottom for the stock. (2) Apple is at a 30 RSI. In the last 5 cases etc. etc. etc. Here are the earnings. HE is the TTM. He were the old P/E rangers. It will then be up to the readers to decide what they think Apple will head with that information and more importantly what to buy.
You see, I’ve pretty much hit my limit with publishing data that a lot people simply don’t read and decide to make all of these different inferences that fly right in the face of the inference I’ve just logically drawn from them with the weight of the evidence.
Hence, I decided instead of being attorney and jury, I will just be the attorney. If the weight of the evidence suggests 99% XYZ is guilty, and you want to say innocent, that is only your problem and no one elses. We have great research here. I’ve put that research into models — like the SPY model for instance — and you’ve seen the results. This correction is a pretty big outlier case for Apple and everyone wants to abandon ship or the model as a result of that. So easy enough. Bullish Cross will henceforth be a research publication. Create your own models. There will be no model portfolio or any recommendation to buy any spread whatsoever. Hell, I probably won’t give a price target on anything.
Just the data. And the analysis. The inferences will be extremely obvious with anyone possesses even a far below sub-average IQ. I’m just making them for you. You make them yourself. I’m going to do some deep earnings analysis, seasonal analysis etc. I’m also going to do the same sort of analysis on the SPY which will make buying and selling obvious. But I’m not going to make the inferences and/or the decisions themselves any longer.
3:00 PM — just in case you were wondering, the rally has already started. It’s just going through its normal process. Rebound. Re-test. Further rebound. Further re-test. It’s over. The rally has already begun and many of you don’t even realize it.
4:01 PM – Ok. Apple gave back a few bucks of last Friday’s rally. No biggie. It re-tested the lows in the process. Apple is still at a -30M Chaikin Oscillator or there abouts on the daily. Still in relatively good shape. Just be patient. A day like today with the Chi Osc bumping up to -23 would be annoying as well. But with it down here at -29M, we’re still in the same exactly bottoming process we’ve been in since thursday. Just relax.
6:25 PM — when you hover over the “model portfolios” link in the NAV bar, you will notice a drop down menu that says 2011 to 2012 performance. Remember that Bullish Cross launched in June 2011. The first fiscal year ended June 2012. So that link 2011-2012 performance shows the year’s performance exactly 1-year from launch. That has caused confusion. So i Just took it down. Problem solved. If you want to see performance, just click on “Model Portfolios.” We went from up 391% to down -4%. Fun. God I’m so exhausted right now. I can’t walk everyone through such simple concepts. My brain power is just spent right now. I’m going to bed. Probably poor organization on my part. But the “Model Portfolios” page shows the up-to-date performance. We update it every Friday. Sometimes when work is heavy we get held back and have to update it on Monday. It’s a long tedious job on top of the 1,000,000,000,000,000 other things going on.