TRADES TODAY
1. Long SPY 10,000 Shares @ $137.00 in the SPY Model Portfolio.
2. Long SPY 4,250 Shares in BC Long-Term Portfolio @ $135.90
MODEL PORTFOLIOS CURRENT POSITIONS
1. The Bullish Cross Apple Model Portfolio
See portfolio.
Enter Portfolio Here
2. The Bullish Cross SPY Model Portfolio
None.
Enter Portfolio Here
3. The Bullish Cross Long-Term Portfolio
Please see the portfolio.
Enter Portfolio Here
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
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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
None.
2. The Bullish Cross SPY Model Portfolio
None.
3. The Bullish Cross Long-Term Portfolio
None.
4. The Apple Common Stock Model Portfolio
None.
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THE LIVE BLOG 9:30 AM – 4:00 PM
3:30 AM — Good doom and gloom morning to everyone. Good to see the futures up, and yes we’re still in the absolute nightmare of Apple sitting at $540 a share and trading at a 12.2 P/E ratio with only two months left before I blow my brains out.
But anyways. Let’s talk about where things stand and where we need to go from here. So far Apple has essentially traded sideways ever since having that capitulation-type day down to the low $530′s a share. We have tested the $530 area on four days now. And in each day Apple has held its ground well. Right now, Apple is still sitting under a 30-RSI on the 14-day chart which is encouraging. Moreover, the NASDAQ-100 is sitting at, near or under a 30 RSI when I lasted checked. Which like Apple, tends to be a very solid indicator for an incoming rebound. Apple happened to also close at a 26 Chaikin Oscillator. Now that’s not super extreme or anything, but it is still consider oversold. With being down here at a 28.19 RSI after hitting a low-point close of 24.33, the hope is we will now experience the aftermath of that between now and January expiration which is just a little more than two months from now. Remember, most Apple recovers are v-shaped recovers and there is far more time between now and January expiration than there was between the time it took for Apple to fall from $705 down to $530. Just keep that in mind. Most other recoveries were v-shaped recoveries. I think it’s more important for us to see Apple make a recovery to $640 to $650 by the mid-to-late December than to get all the way up to $700 by January. A $650 mid-to-late December rally would be plenty enough for us to make transitional trades. So here is where Apple stands in terms of its RSI:
On top of being so extremely oversold on the daily 14-day RSI, Apple is still deathly oversold on the 7-day RSI. That one is also very important when it gets to extremes. Whenever you see extremes on that, it’s typical an indication that things have gone a little too far:
And of course, in spite of the sideways action we’ve seen the past few days, Apple still is sitting at an extremely low Chaikin Oscillator on the daily chart. Notice that this is typical one of of the more reliable signals for Apple:
On the 5-minute chart, this is what we have going on. Remember, symmetrical triangles tend to be continuation patterns, but don’t have to be. Meaning, this one can break up. We’ve seen plenty in up trend end those up trend-ends and we’ve seen ones in downtrends bottom the stock. It’s just not typical. But given the extraordinarily oversold conditions on the daily, it wouldn’t surprise me to see this one break to the upside. Apple closing above $580 this week would be a huge success for our $655 – $705 predicament. A close above $580 this week would surely set Apple up to re-take the $600 level next week and that would give us 3-weeks to get even a small window of opportunity near $650 a share. You get that opportunity, 90% of you need to take it and transition out of your $655 – $705 spreads. In fact, don’t wait for me to tell you. If you see Apple break through $600 a share and your spreads start to become very reasonably priced, then get out if you can’t stomach it any longer. Personally speaking, if I see Apple run to $650 by mid-December, I’m sticking it out. I didn’t play russian roulette just to get no reward in the end. If I’m getting put through the ringer, I’m collecting. But that’s just me. For you, you need to move on if Apple gives you that opportunity at $630 to $650 by mid-December.
Finally, under the circumstances that we’re in, just remember to chill out a bit and listen to Slow Life.
There There….
Sail…
10:05 AM — Apple is starting to move with the market whether it’s over or under performing. So you need to keep an eye on AAPL, the SPY and QQQ. When you see Apple tick down a few dollars, it’s not because of Apple per se. It likely is because the market has just ticked down. And vice-versa. But we are starting to see some outperformance by Apple. Again, we just need to first get the bleeding to stop. Once that happens, Apple will set the stage for a larger recovery and quickly.
I just cannot be in the position to entertain every worst fear that everyone has here. That’s why I run a Bullish Cross live. To post what I think is going to happen. “But what if’s” isn’t going to cut it. Really, I cannot be in that position.
First, I’ve told everyone here at least 1,000,000,000,000,000,000,000x now Apple today is not comparable to Apple in 2007-2008. In 2007, Apple had $3.93 in EPS. Today Apple has $44.15 in TTM. The company is 11x larger. It is not the same animal. It would have responded differently to financial crisis and it would have trended different with different volatility. That’s why it’s very rare for me to go back to that era if ever.
So if you ask me, Andy back in 2006… you’ve already lost me. So don’t even start a sentence like that. Next I’ve already outlined what I think is going to happen. I think Apple is going through a bottoming process right now and then will see a big rebound in short order. It could be off of a u-recovery which will take a little longer to start, but we will see a stock that rallies into year-end. There’s a fair chance that we will see Apple close the year out above $650 a share. There is a fair chance we see it hit $650 by mid-December. So that’s where I stand. I cannot entertain anything further than that. Now if you want to disagree and sell today or entertain further fears, go for it. Have fun. I cannot be in the position to continue to combat those fears. I can only post logic and reason in BC Live and it will be up to you to weigh the evidence. I know you have big decisions to make, but I’m not going to all of a sudden give you some further insights that are not already posted here at Bullish Cross.
You know, I have these friends with me that do this all the time. They say. “Andy, give me your take on things” What the fuck are you talking about? I just did. I just posted 4,000 words at BC Live. It’s not like I’m hiding a bunch of stuff that I’m not posting here. In fact, by writing things out, I’m being a lot more detail oriented. So you’re going to get a better picture here than with a conversation. In fact, in most cases the conversation just reiterates what I just wrote at Bullish Cross.
But anyways. Let’s talk about the markets now. First thing’s first. The SPY looks like it could be forming some sort of an inverted head & shoulders or triple bottom or something like that. Or it could be forming a bear flag and we’re all fucked. It’s either or. Alright. Take a look for yourself:
This feels a little more bullish to me than bearish. But who knows. I was thinking last night about going long the SPY with this set-up in mind. But if it loses the lows, we could see one last push to the downside. Because that is all I think the SPY has left in it. One more push down if that. So why not go long now? We probably will today.
The NASDAQ-100 looks like it’s forming something like a falling wedge or maybe a bear flag. Who knows. It’s definitely consolidation after a down move which tends to be bad. But again, you can only analyze that with the backdrop of what is going on with Apple and the set-up on the SPY. But here is the set-up on the QQQ. It looks a little messy:
To be perfectly honest with you though, the NASDAQ-100 is oversold. And the set-up on the SPY looks pretty decent. I think those two things together argue for at least a rebound if not a bottom. Take a look at the QQQ-day. You can see that it’s getting pretty darn oversold now:
What’s more, the NASDAQ-100 has taken a 10% correction. So there you have it. Even if we see lower lows, we’re not far from a bottom in the whole market. And if we’re not far from a bottom in the whole market, we’re not far from an explosive rally out of Apple. Because this part is absolutely clear. If the market bottoms and starts to rally, Apple is going to go ape-shit crazy on rally. You can tell that at this point the only thing that’s a drag on Apple is the broader market. You can sense it every session now.
Now the SPY is the thing that is the most concerning to me. The SPY hasn’t really hit any oversold territory. And that is a little annoying. Because if the SPY were oversold, then it would make it far more likely that the SPY was near a bottom all things considered. That being said, the $NYMO did fall to -55 yesterday. That is getting close to a bottom. -80 is a bottom. -100 is an extreme bottom. The $NYMO is the most reliable bottoming signal for the entire stock market.
Well I take back the SPY comment. The SPY is down to a 32 RSI. Notice that a 30 RSI on the market as a whole is pretty low. It’s not extreme. We’ve seen the SPY get down to a 19-22 RSI before in brutal corrections for those that remember. Like the May correction had the SPY down there. So did the last August correction. But in a lot of market corrections, a 30 RSI tends to do it. But it’s mostly the $NYMO that bottoms things out. See below:
Finally, Apple’s triangle continues. It’s looking more like a bear flag by the minute though. Yet, given that Apple is still so oversold it’s hard to believe that it breaks to the downside, but it certainly could.
Yet, I will say this. That while on the minute chart it does look like Apple is forming a bear-flag, the chart is far more encouraging on a 60M basis. This looks like a consolidation or triple bottom to me. We saw this after the July correction where Apple tested the $570 level three times before taking off. So this feels a little like that and it even looks a little like that on the 60M chart:
Finally, notice that the SPY is getting close to oversold on the 60M chart which means that we could be nearing at least a near-term bottom ahead of one of those very nice little short-lived rebounds. Also notice this triple bottom set-up or inverted head & shoulders or whatever looks pretty prominent on the 60M chart of the SPY:
Alright people. We’ve been doing this same thing every day for a year and a half now. If you want to start getting your grips on the things, you always have to be watching the SPY, the QQQ and AAPL. That’s at a minimum. If you want to go further you can. Like you can watch financials, materials, industrials etc. But I don’t think that’s particularly necessary as that information is already contained and reflected in the SPY and QQQ.
The reason you always want to be watching all three is because the SPY and QQQ impact what happens with Apple. For example, Apple’s pattern right now is ambiguous at best. At worst, it’s a bear flag ready to send Apple spiraling down in a fiery crash. But suppose the SPY suggests that the market is ready to pop or the QQQ suggests that we’re ready to see a very sharp rebound. That could shed more light on Apple’s formation. You see, that’s why it’s so important to watch everything.
Don’t think that every little move up or down that Apple makes is Apple’s. It’s not. 90% of the time it’s market related. When you see Apple tick-up during the day, in most cases it’s because the whole market has just ticked up. If you see Apple fall from $548 down to $543, in most cases it’s because we just saw a very sharp reversal in the broader market. If today, you all of a sudden see Apple rebound up to $550 a share, it’s probably because the entire market has reversed course and is now green. So watch the market. Apple is market dependent right now.
If the market direction turns for the positive soon, Apple will thrive in that environment. That’s when our recovery will begin. Right now, it looks like Apple has chosen the path of consolidation which is fine for now. The only negative right now is that Apple is no oversold by any stretch on the near-term indicators. The 60M RSI and Chaikin Oscillator are far off oversold. But the daily is still deeply oversold.
Let me give you a little secret about the RSI and Chaikin Oscillator. Not just with Apple. With EVERYTHING. Including the stock market as a whole. Anytime you get this oversold on the RSI, the next move tends to push the RSI way into overbought territory. So right now, you are quite literally experiencing the low-end of the range for everything. For the SPY, the QQQ and for Apple. Apple is at a 27.81 RSI right now. That’s why I have doubts of this formation breaking to the downside. But it might. But then what? Then we are back to where we were last Thursday an Apple is no lower than it’s lowest point. Why? Because it would hit extremes again. And so there you have it. Apple is at the bottom end of its range. It’s not going to have much or any downside at all from here and for Apple to push a lot lower, it needs to see a HUGEEEEEE rebound first. And when I mean huge, I mean like $100+.
10:50 AM — by the way, here are all of the charts together. Notice everything is now oversold together. Which means we’re getting close to an everything all-out market rally. This is the key to Apple rebounding:
As you can see above, Apple, the SPY, the QQQ, the NASDAQ and the Down Jones are all oversold. Now when it comes to the broader market, in MOST cases hitting a 30 RSI or just under is enough. You can see that even in big corrections hitting just a 30 RSI has been enough. But there have been times where the corrections have been larger. Where the SPY/Dow/QQQ/NASDAQ have gone deeply oversold. It happens but not often.
Can this be one of those times? Sure. It can. But it can also just be a normal correction. I mean, just look at the past three years of the NASDAQ. In that 2010 flash-crash induced euro-crisis correction, the NASDAQ never dropped below 30. Neither did anything else. In the Feb-March correction of 2011, a 30 RSI sort of stopped the bleeding then. And then we have the last two corrections which were really f’d up. The debt ceiling fail lead to the deeply oversold sell-off in that crash. It was a crash. Everything went straight down. Then we had last May which was also a little more bloody than usual. And now we have this correction. We’re right under a 30 RSI on most of the indices. Could there be more downside. Sure. But I don’t think we’re far from a bottom on the entire market to be perfectly honest. As I said earlier, I’ll probably take a SPY position today.
11:00 AM — Apple at the lower trend-line of the bear-flag. Let’s just call it that for now. We’re at the bottom of the trend-line. We lasted visited the top of the trend-line yesterday near $550 a share. So down here if Apple loses $538 I think it is, then it could lead to a full all-out breakdown with Apple at a 27 RSI right now. I just find that very difficult to believe:
Position taken: Long 10,000 Shares in the SPY Model Portfolio @ $137.00
11:01 AM — The SPY has had enough of a beating I think. This could be a premature long position. But I’m happy with the entry. I’m probably going to be holding this position for a while. I could ride it down a few points and then back up and will sell hopefully near $150.
12:40 PM — The market is down 90 right now and Apple is still hanging onto positive territory. What does that tell you? Since last Thursday introduced the best set-up Apple has seen, we have seen a complete and total halt of the selling pressure. Just hang in there. We have so much time between now and expiration. Just be a little more patient. When the market turns, so will Apple. And we’re not far from that.
2:25 PM – Some really good news. It looks like the $NYMO is currently estimated at -79. Remember -80 is what we want to see. Personally, I hope the Dow goes down 220 today at the close while Apple closes just slightly in the red. Say -$0.10. That would be extraordinary. That could push the $NYMO down to -85 to -90. That would really bottom us out. The $NYMO is the biggest indicator for a market bottom than any other indicator. It’s even highly correlated to Apple bottoms. Take a look below. This is where we will close if the $NYMO closes down near -80:
3:00 PM — Alright as we head into the last hour of trading, the $NYMO is now right under 80 and Apple is still holding its lower trend-line. Remember, even if Apple were to breakdown below its lower trend-line, where is it going to go exactly? It’s still extremely oversold:
The SPY, QQQ and Dow are all very oversold now. And with the $NYMO touching down to -80, we’re really starting to get close to the end of this correction for the market. And once the market improves, Apple improves.
3:16 PM — Apple is re-testing it’s lows here. I’m telling you, this is a fair trade-off. You want the markets to bottom. And the market’s best shot at bottoming is to have the $NYMO fall as far as it can go. -100 would be great. But anything below -80 is fine. And as long as Apple holds its lows, we’re fine. Take a look below:
3:20 PM — Apple just needs to hold this area right here and we’re fine. Hold this low $530′s for a third time with a -85 or -90 $NYMO close and we will be in business. You need to hold on just a little longer. Almost there. Almost there.
We could be right at the edge here of the end of this.
3:45 PM — this is not bad. Trust me. This action is good. The market is down 177, the $NYMO is almost at -90 and Apple is holding its ground. They are buying the shit out of Apple at $537.00. It’s support is being held under heavy hell fire. This is impressive. Look at $537. The market is rolling over and Apple’s $137 isn’t budging. I think this could be the bottom for the whole market. We will get the conclusion soon. But this is it. This is the best buying opportunity you’re going to get in the market and a once in a lifetime opportunity in Apple for the lucky asshole who can buy any spread of any kind down here at $537.00. I think this level is being held like a camp right now.
Position Taken: 4,250 Shares in SPY @ $135.90 in BC Long-Term Portfolio (40% position)
3:50 PM — Alright. We’re deploying the rest of our cash position in the BC Long-Term Portfolio in the SPY. We just bought a 4,250 share position in the SPY for the BC Long-Term Portfolio. This is different than the SPY Model. See here:
http://bullishcross.com/the-bullish-cross-portfolio/
This constitutes roughly a 40% position of the portfolio. We’re indexing right here for timing purposes because I don’t time to sit there and spread the risk. So we will just take the full S&P 500. 40% position. We may reduce that exposure and go overweight in some financials soon. But I think this sell-off here today may constitute the lows for the market. If not the lows, then pretty damn close to it.
3:55 PM – Apple is still holding its lows. The market has made substantially new lows, but Apple has still held its lows set last Thursday. A full week without a new low for Apple. Until Apple loses its $533 lows, it’s still in ok shape and still consolidating. Meanwhile, the market has lost quite a bit over the past week, got really oversold, and now the $NYMO is in the tanker. Things are starting to look like a full bottom across the board now. The $NYMO is currently at -87. We won’t know the final number until about an hour after the market closes. But the estimate is close enough. Don’t forget, Apple is at a 26 RSI right now on the daily. That’s keep a steady floor under the stock. We are really not far from a big rebound. You just need to be patient at this point:
4:01 PM — The $NYMO has closed near 87. That could suggest that the SPY, QQQ and Dow may be right at a bottom. We’re also oversold across the board on all indices and on Apple. The next broad move is up. We don’t know precisely when it will begin, but the next broad move will be deep green. That’s all I can really tell you. The space between today and January will be huge up. Does it start tomorrow or Friday or Monday? Who knows. I just know the big broad next move is up. This is what the $NYMO will show once it records over the next hour:
As you know, everything is extremely oversold. Here they are. This is how things have ended:
1. Apple at a 26.89 RSI
2. Apple at a 27.9 Chaikin Oscillator
3. Apple at a 21 RSI on the 7-Day
4. Apple held its ground for a triple-bottom
5. SPY at a 28.06 RSI
6. QQQ at a 26.95 RSI
5:30 PM – So I noticed there are a lot of you that think that the technicals are nonsense. Well if that’s what you think, then you should consider why you are in Apple right now at all. Reflect on the reasons for holding your spreads. Right now, the $655 -$705 is fetching $1.00. That’s $1.00 more than $0.00. The 2014 $900 – $1000 spread is a 50-bagger right? Well if you buy the 2014 $900 – $1000 spread and Apple makes it up to $1000 a share by next January, your spread will be worth $50.00. It will be the same result of Apple hitting $705 a share this January.
So you have an out right here and right now. You can sell your $655 – $705 spread and buy the $900 – $1000 January 2014. You would just need to wait until 2014 to collect. That’s basically your options right now. So if like A.S. you believe technicals are the equivalent of this chart below, then consider that possibility of transitioning:
5:37 PM — by the way, for those who don’t think it’s all mumbo jumbo, mumbo jumbo, mumbo jumbo, here is the final print of the NYSE McClellan Oscillator ($NYMO). The S&P 500 is almost at a bottom:
Not sure I understand the point about the $NYMO… in Andy’s chart, the significant $NYMO pattern seems to be when it displays positive divergence between May and June. But to get that, the $SPY price had to drop further, while the $NYMO became less extreme, which we surely can’t be holding out for. What am I missing?
I believe you’re right on track. No positive divergence yet so there’s no confirmation of a trend reversal. Andy is just saying SPY may be getting there already.
The positive divergence is NOT the only significant pattern. It is unfortunate that the chart he happened to use contains an annotation from a few months back — when he posted it, I was afraid it might be confusing because of that. The larger pattern is that when $NYMO reaches extremes, a rebound occurs. When there is positive divergence, there is an even greater likelihood for a strong rebound.
The blue line at the lower extremes on the $NYMO chart is -80. The red below that is even more extreme. But the blue line makes his point at -80 — whenever $NYMO reaches those levels, there is a strong rebound, and it does not require positive divergence (though that helps when present). Someone more versed in these things than I am may have more to say about it.
8 Reasons The iPad Mini Launch Should Have Failed by Jason S.
http://seekingalpha.com/account/portfolio
Don’t judge a book by its cover.
Here’s the actual article link: http://seekingalpha.com/article/1009331-8-reasons-the-ipad-mini-launch-should-have-failed
Not sure if anyone shared on the board (900+ just too much to look through), latest sell-side comments from MS (Katy Huberty) below. Positive tone.
Apple, Inc.
Suppliers Highlight Demand
Upside; Margin Story Intact
Our Asia supply chain meetings point to potential momentum behind several key AAPL debates.
Namely, iPhone and iPad Mini sales are surprising to the upside, China Mobile remains a likely 2H13 catalyst, and component costs will fall in 2013 boosting margins.
iOS demand surprising to the upside: Key suppliers into iPhone and iPad noted above seasonal March quarter order trends, stronger than expected December quarter revenue, and the potential for further upside to expectations before year-end. We continue to believe builds outpace Street unit expectations in the December (consensus expects 46M iPhone / 23M iPad) and March
quarters (43M iPhone / 19M iPad). Supply constraints, including in-cell panels, are no longer an issue with yields 70-80%+ in C4Q. Beyond Apple, demand remains weak across the supply chain with PC demand weakening even after the Win 8 launch. Server and HDD markets also weakened through October with low visibility and therefore cautious forecasts in 2013.
China demand stabilizing, remains an opportunity for Apple: Distributors expect iPhone 5, with its new form factor, and iPad Mini, with a lower price, to sell well in China. The industry expects the Chinese government to issue LTE licenses in 2H13, which likely coincides with an iPhone distribution agreement with China Mobile.
Expect continued component cost downs, though NAND prices could be more stable and decline less than the 40-50% through the iPhone 4S cycle. Other components like panels, PCBs maintain trend of mid single digit quarterly price declines to Apple which help drive gross margin improvement in C1H13.
Our recent investor survey highlights China Mobile, iOS unit upside, Apple TV and gross margin expansion as potential positive stock catalysts over the next year (page 2).
Thanks, this is good!
Is this news released today?
Thanks, Iqbal. Let’s remember this is Huberty! This is fantastic news.
I’m intending to sell some of my AAPL shares this morning and buy Jan ’14 700 calls (~$25) with an intention to sell Jan ’14 $900 calls when the right shoulder has performed, so say near $650, which should return the price of the $700s
If we then revisit $537 I’ll either buy back the stock, or wait for a confirmed bottom and add more Jan ’14 $700 – $900 spreads.
I don’t see much downside here, but would be more cautious once the right shoulder has formed.
This is explicitly NOT a “recover losses” play, but rather an attempt to calmly invest what resources I have [left] in a rather emotional environment.
Does anyone have any counter proposals that I should consider, at a similar risk level but better probable return. I am working on the premise that Apple’s fundamentals remain sound.
Thanks
Sounds reasonable to me, I keep looking at similar strategies. I struggle more with figuring out where to put in the left hand than anything else.
PERSONALLY, i’d rather sell the 800′s against it when u reach 600 or 620…or perhaps even 587. I said last week aapl was bottoming and this week the market would follow. I think there is gonna be a nice rally soon then one more flush before the real rally. I think we could get up to 575 or 587 before testing the 555 level, but I don;t see us higher than 620 around earnings. Again, I’m basing this on pure feelings, but after thinking i was being conservative with 660-710 spreads, i’d prefer to actually be conservative on 2014′s. I think if you can have a 700-800 2014 spread at a very low cost basis, you can worry about buying something more aggressive on an inevitable pullback between now and april.
Interesting. And not a decision that needs to be made immediately. thanks
Apple 2.0: Analyst: iPad mini ‘less cannibalistic’ than expected http://t.co/bV1Mt931 $AAPL
42% intending to purchase mini to replace [explicitly] Windows PC
0% intending to purchase mini to replace a Mac.
It that too good to be true?
A good article from SA:
http://m.seekingalpha.com/article/1009431
Want to see China Telecom deal first before getting too excited about any other china carrier deal.
Deal expected in early December so keeping my fingers crossed.
TD Ameritrade is showing yesterday’s closing price 534.23
Andy: Can u address this question? Why do you think the bounce here will be diff than May assuming it bottoms like it did in May at these levels? RSI and NYMO are pretty comparable…May took 4 months to rally to 700…by June end, it was only at 590 and we could be in a similar pattern too…serves the option mkt as well…so, what is the technical basis for this? On PE basis, we are lower by about 1 but the rally could happen at the same pace as in May – June….can u refute this with some logic pls? Is seasonality our only hope? Not sure whether fiscal cliff screws up the seasonality…
He won’t answer this one for some reason. It’s been asked countless times.
It really appears to me that we are running out of time. I have given up on my December 600s.
Now, I and literally hoping to just bottom and reverse and get another bear market rally of maybe 20 points. I will then sell and maybe buy longer term spread.
It’s feels like the theta decay is so great down here that we are swimming upstream and running in place even with a reversal.
That sorta sucks…he is using the same technicals to argue for a huge short term bounce…so, he should explain why “this time is different” than May…or, we are just banking on sheer hope @ seasonality here…as I have said before, my worry is 600-650…rest of the Jan spreads is a question of how big of a cap loss are you comfortable with…fiscal cliff will dampen all rally chances…let’s see how next 2-3 days go…we are hanging by a very thin rope here
Do you use optionsprofit calculator? Just put in the 600/650 spread and use your math skills to help me out. It’s an app you can download.
Even assuming we bottom, we are not going to go up that much unless we get a sharp move up fast.
And f we go down further, turn out the lights.
Please tell me I am wrong,
Jack, I think you are the one who had a conversation with katy huberty last week, that her comments were – big funds got out of long time ago, now waiting for the bottom, it will rally up to 650+ mid-late december …. – do you think what she said still has any weight or credible ?
Thanks
I don’t remember the time frame being that specific. Was more general statements.
Regardless, doesn’t matter what these analysts say.
“”We’re now going through a process that’s not unlike what happened last year when we faced the debt ceiling fiasco,” Cramer said, referring to when in August 2011, Congress did not agree on raising the U.S. debt ceiling until the last possible minute, leading to massive volatility in equity markets and a downgrade of America’s debt rating. “We fell 19 percent peak-to-trough before avoiding that catastrophe in the nick of time and during that decline it didn’t matter what you bought, you initially lost money regardless … you know, I think it’s going to be this way this time around, too.” http://finance.yahoo.com/news/cramer-until-fiscal-cliff-deal-115431582.html
Doug Kass is supporting the AAPL now. Here is copy paste fron stocktwits.
DougKass
Coming up on RealMoneyPro – Why I believe there is a trading long rental opportunity in Apple today at $537-$539. #stockaction $AAPL
Nov. 15 at 5:25 AM via Twitter
Market is little down due to job data
Jobless claims leap 78,000 to 439,000; storm cited
http://www.marketwatch.com/story/jobless-claims-leap-78000-to-439000-storm-cited-2012-11-15?dist=beforebell
WASH SALE/TDA
Just got off the phone with TDA. I asked the about the wash sale rule and how it applies to my situation, I have gains from the beginning of the year and I need to offset those gains with this crap loss coming soon. I mentioned I may have to sell everything in order to preserve some capital this calender year. I asked what would happen if I establish a new bull spread with different strike prices/year right after I sold my current positions…..He said that it will be considered a wash sale and I wouldn’t get to claim my losses against the gains I had earlier in the year.
For whatever reason I thought different strike prices and a different year would establish a new position and a non wash sale…..Any thoughts???
This is very disturbing, we need to get some definitive answers on this or we are looking at financial ruin,
Andy, can you please weigh in on this issue. Maybe you can hire a tax guy with some of our subscriber fees.
Ignore my comment about u hiring someone, just realized you cannot legally provide tax advice.
Just realize now what a serious issue this can be. I will cal my tax guy and report back to board.
I have spoken to CPA’s and they said the same thing. However it hasn’t been ruled on. So it is kind of a loop hole. Basically it is against the spirit of the law but the IRS just never considered option intricacies. I am not sure if your broker will flag that on your statement as a wash sale even though they told you that.
Wow…we are fucked if this is true…
We have to look into it first. I think John is probably right. As long as they don’t report it that way to IRS we a fine.
But how do you ensure your brokerage doesn’t do that? Isn’t there a change coming for reporting option transactions from this yr or sthg?
Well if you use different strikes the cusips are different so your brokers software may not flag that. So it seems you might get away with it but I think it is frowned upon.
both schwab and options express do NOT report it that way. their software does not single it out as a wash unless it is the same strike same expiration. actually they are not even required to report option activity to the irs until the 2013 tax year.
This has also been my experience with schwab.
It was explained to me that you might get away with it but it is not what the IRS intended.
Is this true for different expirations or just strikes? Obvious question but thought I would ask…
He said differtn exp. and strikes didn’t mitigate the issue, that’s why I panicked.
By to way, if apple can just get up to 588 sometime in Decmeber, out january 600/650 will double from here. If it can get there in early December , our spreads will go up 150%.
By end of December, then our 600/650 is a double. This begs the question, can we get a double in a less risky way between now and end of year? Maybe roll down?
Also, are they going to report it to IRS or it is upto us?
Since last year they are reporting to IRS wash sales. Somebody gave me an article that Andy had wrote about wash sale on buying different strike. I lost it. I can not find it now.
Somebody gave me here on BC about 10 days ego.
IF this is the case, i will have to officially file for bankruptcy
Fuck man…this is an all around disaster…
You see my post about options profit calculator.
You see the problem we have. It’s not just apple bottoming we have to worry about.
Its really figuring out when to sell. What are your thoughts?
Let me check…I think the best option is to hold and just realize enough losses by mid/late Dec to offset the gain…I don’t see any other choice here…let me do the math..rolling down to Dec is a bad move IMO…
Jdiesel – instead of BK, you can sell all your transitioned positions and realize losses by year end…basically go to cash by Dec 31 with whatever is left..sorta sucks but better than BK route…we should get a definite answer to this first though
i sold my jan 660-710 and bought 565-585 jan…if that counts as wash sale, im fucked
You are going to believe the person who anwers the phone at TDA? Most of the people that staff those positions do not know anything!
if you’ve sold go to tda and look at your ytd tax center statement.
it shows box a, b, and c and what they report to IRS
at least thats what i remeber from last years profits.
so this year if you bought in may and had to sell at a loss in the last month, what it should show is a loss (a signficant) for the entire year right? You shouldn’t be showing profits for the year?
How does it show for you? Haven’t you transitioned already? Do you have TDA as brokerage?
Didn’t we conclude earlier as a group that this is not an issue? Anyone have articles or takes to the other side of the coin? This is a big deal – all transitions would be useless if this is true.
Again: if you’re long, and you want to liquidate positions to book losses, and then immediately get long again to get the benefit of any upswing, it’s going to look really, really bad. That is specifically a no-no according to the wash sale rule… so the only question is whether you can sneak through on the technicality of changing strikes. That’s a decision everyone has to make on their own, with their own lawyer/CPA/tax advisor/etc.
Here’s a thought: rather than taking an all-or-nothing approach, why not sell a portion of your positions? Sell 50% or something, enough to offset most of your earlier gains, and stay long with the rest to catch the move up into January.
Alternatively, you could wait to liquidate until about Dec. 15th, if you can get out even at that point, and then wait until 31 days later to get into 2014 LTCG positions. basically, call Janaury a wash (no pun intended) and use the wash sale period to regroup and get ready to reposition for next year.
IMHO this doesn’t have to be a tax disaster unless you make it one…
I just asked my hedge fund buddy that controls 4 billion in assets why the Apple sell off….Map issue we got lucky and got out lol Amazing we can be killed by clueless reasoning, but they control the money and it doesn’t matter what the reason is! But on a better note they are BUYING A LOT at these levels. I also asked if everyone kind of just follows everyone when it comes to selling and he said YES. So I guess everyone will just be following whatever leader and will be buying.
Why the fuck does Andy not have these types of connects man? I see many of you guys reporting on how hedgies just sold at the top and it was so fucking obvious, etc…
No they send a form to the IRS . But it won’t be aapl. They will be fifferent so they may not say wash sale. Also the IRS probably won’t catch it if that happens. Whether that withstands an audit is different. You could argue that a call option gives you different leverage to the underlying. It seems no one has ever done that. But reading the rule, the Treasury isn’t really in favor of doing so. So it violates the spirit of the law- presumably. EBR, you said you were SEC? Can you weigh in?
I don’t think the SEC has anything to do with IRS regs…
Yesterday Andy posted links to 3 videos in his opening post where he was recommending to chill out a bit. I wanted to show my wife, but the links have disappeared. Anybody have the links???
Thanks in advance.
JDIESL and Henry 3dogg, a question about your spread strategies, which I find interesting (provided we can some how get out of this mess…): Why would you go for a longer term spread? Say, the feb 550/600 now sells as a three bagger. Well, you may say it may sound risky, but: if the stock misses January and plunges below 565, how in the world could we possibly expect the 2013 become a successful year? In order for us to be safe with 700 by Jan, it means we are shooting at a 800/850 final target at least (unless you do not imagine going thorugh the same drama we are going thorugh now…). And how could we possibly hit that target if we miss January and start 2nd quarter below 550? Bottom line: if feb 550/600 sounds risky to you (and it may well be), jan 2014 looks far more risky to me. What is wrong with my argument? Thanks for your attention.
By Oct 2013 heading into Jan opex, we should have $48B more in cash than now. Also depending on who you believe AZ (most likely/bear case) is 63 which is too high for me. EBR has 53. TTM now is 44. So you have growth from there by Jan14.
AZ has never really given his bear case for Jan14 besides $1000. I’d think that his bear case on margins/rev might lead to a # closer to $750 for Jan14 closing price.
Bulltrade – aren’t you concerned that Andy is going to banish you from BC for all the useless posts you keep making? I feel your pain, I really do, but how does swearing and saying we are ruined going to put money in your pocket or help in anyway?
He’s beyond all logic and reason. Spent 2 weeks trying to help him out , but ever 30 minutes, same shit.
Ok guys – if this is how u all feel, I am slowing down and will find some other way to vent my emotions…thought we are all in this together…may be, I misspoke a couple times or asked inappropriate questions and I am sorry about that…going through the toughest times in my life in the last 4-6 weeks..
It really doesn’t bother me, but you are relentless. We’re gonna get out of this.
Come one man…I am just asking some tough questions…may be, I will shut up if that’s the risk because I can’t afford getting kicked out…..I know you are ok because you transitioned all to April…but not the case with many here…
Your fine. We need this board. These notes out on Qualcomm and apple might save our ass, if this bottom holds, we can discuss our strategy of when to roll over weekend.
Just need green day.
Due respect, its not that you keep posting, its just that your postings have all been the exact same. For days now, options (no pun intended) have been presented for people to either transition to something else, or to STFU and stick with the hand to sell a bounce or something. Take action, or don’t take action, but make your choice and stop bitching about the position you’re in because THAT isn’t productive, and its not going to change anything.
Andy isn’t Jesus guys.
Why yesterday’s closing price is 534.23? I think it closed around 537 yesterday.
my platform shows 536.88
looks like a dividend adjustment, which is wrong. today is payment day, ex-div was last week.
@Bulltrade – Andy on wash sale rules:
http://bullishcross.com/2012/01/bullish-cross-live-107/#
It’s helpful, but inconclusive. We were all relying on using different strikes, but George refuted that.
Basically, its a small risk, but if we are wrong, it’s bad, maybe very bad.
bull trade and diesel. look at my post above. the wash is gray area but the td guy may not know what heis talking about. schwab and options express software does not pick it up or flag it as a wash. also whether it is correct or not this was discussed here before and it was consensus that it was ok. but no guarantee.
Here is an article on wash sales on options. According to this logic, you can never replace a losing spread with another. Even after it expires. If you constantly trading spreads it becomes a ridiculous mess.
http://www.fairmark.com/capgain/wash/wsoption.htm
Here is the tax law on wash sales – from the IRS Most of us are concerned, so we should try to find the part that effects us.
http://www.irs.gov/pub/irs-pdf/p550.pdf
I think the key parts are between pages 59 and 64… excerpted below:
You cannot deduct losses from sales or trades of stock or securities in a wash sale unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities.
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:
1. Buy substantially identical stock or securities,
2. Acquire substantially identical stock or securities in a fully taxable trade,
3. Acquire a contract or option to buy substantially identical stock or securities, or
4. Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA.If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.
If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities.
In determining whether stock or securities are substantially identical, you must consider all the facts and circumstances in your particular case. … bonds or preferred stock of a corporation are not ordinarily considered substantially identical to the common stock of the same corporation. However, where the bonds or preferred stock are convertible into common stock of the same corporation, the relative values, price changes, and other circumstances may make these bonds or preferred stock and the common stock substantially identical.
Options are generally subject to the rules described in this section. If the option is part of a straddle, the loss deferral rules covered later under Straddles may also apply.
A straddle is any set of offsetting positions on personal property. For example, a straddle may consist of a purchased option to buy and a purchased option to sell on the same number of shares of the security, with the same exercise price and period.
Generally, you can deduct a loss on the dispo-sition of one or more positions only to the extent the loss is more than any unrecognized gain you have on offsetting positions. Unused losses are treated as sustained in the next tax year.
Rules similar to the wash sale rules apply to any disposition of a position or positions of a straddle. First apply Rule 1, explained next, then apply Rule 2. However, Rule 1 applies only if stocks or securities make up a position that is part of the straddle. If a position in the straddle does not include stock or securities, use Rule 2.
Rule 1. You cannot deduct a loss on the disposition of shares of stock or securities that make up the positions of a straddle if, within a period beginning 30 days before the date of that disposition and ending 30 days after that date, you acquired substantially identical stock or securities. Instead, the loss will be carried over to the following tax year, subject to any further application of Rule 1 in that year. This rule will also apply if you entered into a contract or option to acquire the stock or securities within the time period described above.
Rule 2. You cannot deduct a loss on the disposition of less than all the positions of a straddle (your loss position) to the extent that any unrecognized gain at the close of the tax year in one or more of the following positions is more than any loss disallowed under Rule 1.
- Successor positions.
- Offsetting positions to the loss position.
- Offsetting positions to any successor position.
Seems to me, tax treatment of vertical option spreads like we tend to trade is governed by those excerpts. How those excerpts are interpreted… well, like Andy and everyone else says, read it and consult your own experts.