Apple Analysts Reality Check: Bear Rally Is Over 40 comments
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I really enjoy reading many of the Apple (AAPL) analysts out there for their product predictions, market analysis, and fundamentals research. It all makes for good fodder and provides a richness to my Apple knowledge. But they contribute absolutely nothing for me as a trader or investor. In fact, I find them more distracting than useful.
The fact is that most Apple analysts are ego-driven sycophants. They live for the power they wield, as their words can sway markets, and crush competitors. The problem is that the Apple analysts’ real job is to get individual investors to buy stock from their firms, and to work the agenda and spread propaganda for their best clients, the institutional investors.
So, what kind of advice have these analysts bestowed upon us all during this Bear Market rally? Were they providing objective buy-sell advice, weighing the pros and cons of accumulation vs a cash position? Or, were these illustrious analysts playing on the fleeting euphoria that accompanies such an uptrend, and pumping up Apple as the ultimate once in a lifetime value play? A rhetorical question. The fact is that while many Apple analysts have been trimming their target prices due to the economy, the new price targets are equally outrageous and unrealistic.
A notable exception to this hubris was reported Wednesday, December 10, by Morgan Stanley analyst Katie Huberty, who clipped her previous target by $10 and became the first Apple analyst to post a target in double digits to $95. Huberty has a reputation for lowballing her estimates, so it’s not a complete surprise, though it did get the ire up of CNBC analyst Jim Goldman, who ripped into Huberty and inferred that she may have ulterior motives.
I find these inter-analyst quibbles humorous. But the fact of the matter is that Apple closed today right at Huberty’s target of $95, which is also an important support level that most Apple investors would not want compromised. And in after hours trading it lost another $1.00 to settle at $94. I don’t always put a lot of stock into after hours pricing, but the problem is that today the market lost critical support levels, which have for all intents and purposes put an end to this Bear Market rally. Also futures are tanking, and the auto-bailout seems to be dead in the water.
So, the real story here is that the rally is over, due to the loss of 20 day moving averages on virtually all the major indexes today. For the Nasdaq it lost its 20 as well as the top of the gap at 1520-1530, and the S&P 500 it lost 877 and perhaps just as important its uptrend support at 875. The loss of these levels effectively puts the brakes on the rally and opens the door for the Bears to take the markets back down to retest our recent lows.
Disclosure: Short AAPL.
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This article has 40 comments:
ditto to you as a blogger.
- This is exactly why the stock market is a joke. The fact that people in the business that are regarded as analysts are working the agenda and spreading propoganda for the benefit of their investors rather than saying what they believe to be the truth is ridiculous. We're in a "Let's put some lipstick on this pig" market now - almost 100% pump and dump and smash and grab. In the last 10 years (the actual transition came in the last two years), the most amount of money in the market transitioned from investing to trading. There are still large players out there that invest, they just aren't big enough en masse to influence the price of a stock. The largest group of players are trading, and stocks trade whatever way the most amount of money in the market is trading. When the most amount of money started trading on things other than fundamentals, fundamentals stopped being what determined a stock's price. Things like technical analysis, and outright fraud and manipulation, are what drives stocks's prices today. Until the biggest money in the market transitions back to investing rather than trading, the stock market will continue to be a con man's game. Individual investors are playing with a marked deck. They can only win if they know how the dealer is betting; it no longer matters what they know about a company. It only matters what they can find out about how big money is going to trade.
"And with that Shortna Close waved goodbye to the kiddies and traders, and was off, in his short little sled, with his 8 short little reindeer....."
Next up in the Shorter's Happiness Holiday Guide, we hear about about how the blowing of the shortfar saved Shortnukkah for all of Israel.
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Anybody really think AAPL will do a 180 and stop innovating, give up their margins, stop selling music, stop selling iPhone applications, fritter away their cash reserve, and start imitating MSFT? Can you really imagine Steve Jobs acting and thinking like Steve Ballmer?
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Not me.
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If you are thinking about making money in this recession by day trading stocks like AAPL, then you really need to think again. However, if you want to make a move now that will be a home run five years from now, opportunity is knocking - stop whining and answer the door.
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If this is true, then what does this make you?
By the way, if you were trying to support your shorts, tough break. Apple is well over two dollars higher as I write this. A lesson, perhaps, that your own words are true ... best not to put too much stock in aftermarket moves.
The disclosure says you are short AAPL.
Were you really trying to give us an unbiased opinion. Or were you trying to influence AAPL's price downward to enrichen yourself? Hey got any options. After all this is fourple witch day.
If you can't bring forth good quality unbiased analysis, you and what's her face go stick your heads in the sand. Oh, by the way, how often has her forecasts been correct ? I think the proper answer to that is NEVER.
Just checked. AAPL is up a buck 75.
disclosure....I'm long AAPL
OOOOPS! I meant to press the thumbs up button.........
On Dec 12 08:33 AM Roger Knights wrote:
> I hope you have a stop-loss on your short. If Apple delivers an upside
> surprise in its late-January earnings report, it could get to 125
> in a heartbeat. And the "upside" needn't be very great--even a lack
> of erosion of sales growth and margins would be a surprise.
You have no knowledge as an "investor". You demonstrate day-in and day-out that you are completely driven by "charts". The amount of time you spend talking about "support levels" and other T/A terms, and the time you devote to analyzing what has happened AFTER it has already happened reveals you as a charlatan of the highest magnitude. And your constant characterization of the stock market as a team of "Bulls" doing battle with a team of "Bears" is completely ignorant of what is really going on. I hope you don't believe your own tripe.
Using your methods, or by following your advice, a non-emotional investor can expect to be right about 50% of the time. Given that most people are emotional, though, your methods lend themselves well to followers panicking and bailing at exactly the wrong moment. Bully for you that you have been bearish on AAPL for some time now, and so has the market! If you think that your charting saw it coming, then you are in for a world of hurt when the market changes. Because the charts won't show it until it is way too late.
The funny thing is, when I go to the AAPL page on Yahoo! finance and see the titles of the "Seeking Alpha" articles that are linked there, I can instantly discriminate which articles are written by you (as opposed to any other Seeking Alpha contributors) just from the title alone. If you think that that is good because it means that you have established your own style, well, you could be right. Except for this little fact: your own style is completely bogus and without merit.
Thompson
You have no knowledge as an "investor". You demonstrate day-in and day-out that you are completely driven by "charts". The amount of time you spend talking about "support levels" and other T/A terms, and the time you devote to analyzing what has happened AFTER it has already happened reveals you as a charlatan of the highest magnitude. And your constant characterization of the stock market as a team of "Bulls" doing battle with a team of "Bears" is completely ignorant of what is really going on. I hope you don't believe your own tripe.
Using your methods, or by following your advice, a non-emotional investor can expect to be right about 50% of the time. Given that most people are emotional, though, your methods lend themselves well to followers panicking and bailing at exactly the wrong moment. Bully for you that you have been bearish on AAPL for some time now, and so has the market! If you think that your charting saw it coming, then you are in for a world of hurt when the market changes. Because the charts won't show it until it is way too late.
The funny thing is, when I go to the AAPL page on Yahoo! finance and see the titles of the "Seeking Alpha" articles that are linked there, I can instantly discriminate which articles are written by you (as opposed to any other Seeking Alpha contributors) just from the title alone. If you think that that is good because it means that you have established your own style, well, you could be right. Except for this little fact: your own style is completely bogus and without merit.
Thompson
However, once more, this certainly is not to say that Apple is not identical to Sony, but you can not tell that to most on Wall Street who are cold blooded number crunchers on one hand, and go with the flow Joe on the other.
In the past, when several tech companies were laying off employees, making cuts, etc ... Apple was busy coming up with the next great thing. Jobs mentioned this point on at least two occasions. So, one can only imagine that Apple is currently working on reformulation the business model for Apple TV. So far, the Apple TV has not taken the world by storm. A lot of the issues that complicate the matter are not hardware / software, but the business model.
Several people mention the obvious: include DVR features to Apple TV. Yes, technically that certainly is possible. However, Apple's business model has held back. Should Apple only sell content for TV, or allow people a options such as iTunes allows you to "Rip, Mix, Burn" from your physical CD collection, as well as purchase music from Apple.
Currently, Apple TV is more revenue driven. DVR not included. Then again, what a lot of people do not realize is that since Apple is a large company, they are an easy target for lawsuits. So, there may be legal issues for recording content from cable and satellite providers, etc.
To make Apple TV a success, Apple will have to include a whole lot more and in true High Def -- 1080p. Include RSS feeds for your widgets to be on your bedroom television so you can see your stocks, weather, etc before your get out of bed, etc.
The bottom line is that someday in the distant future, there will be no physical media carrying music, or movies, or any other sort of entertainment for that matter. It will all be digital distribution. That much is a given.
The only question is how slow and painful (for the consumer) the transition will be while the owners of the content slowly morph their business models to match the reality.
Apple could add all kinds of neat hardware features into their Apple TV, but it would just be another commodity device in a crowded field of such. The only discriminator for Apple (and they LOVE to have discriminators) is the delivery ecosystem that is iTunes. Apple TV will remain a hobby, regardless of features, until the studios open up the floodgates on digital entertainment.
Thompson
LOL what a jackass
Still, this is not necessarily so. Apple appears to be weathering the economic waters better than most. If this proves true, then an upward adjustment will be in order. We begin to approach the stage in which the standard GAAP accounting and the "real" accounting method converge. We have all of last Q's iPhone partial income to include with this Q's additions. That is something that will not go away.
You make the point "But the fact of the matter is that Apple closed today right at Huberty’s target of $95..." I don't think I need an analyst to tell me what the current price of the stock is. They are supposed to be setting target prices for the future.
C'mon guys! These are stocks, not your children.... Geez!
jegan
Bottom line, buy a mac and the stock or shut up.....lkmd
Disclosure: Zach Is Whack :-)p
If I have a $95 target on a stock, and it closes today at $95, am I right? Is it really that simple? C'mon... $70 next month and $300 in 3 years are not mutually exclusive events.
Zach, I respect your technical analysis, and you've been right short term. But that's a measure of investor psychology.
The Apple franchise... best measured by its ability to generate profits and cash flow... seems to be holding up really well. Now there's every reason to think Apple's business will get clobbered in this recession. There's just no evidence of that happening. Analysts are clinging to the "end of the ipod run" theme, while ignoring the far larger implications of the iphone and subscription accounting.
Honestly, I expect upside earnings surprises for the holiday quarter... and the stock to fail to rally much on the news. The psychology is that negative. But someday, the mountains of cash being printed in Cupertino is going to prevail.
I do think its a historic opportunity--to have a company doing so phenomenally well as a business during such a terrible market and economy. And there's no reason AAPL can't sell off more and become an even more amazing value.
Actually the analysts are amazingly conservative on Apple's business performance. They're still valuing on GAAP earnings, worrying about ipod units (not revenues), failing to consider that maybe Apple isn't cutting prices dramatically because... it doesn't have to (actually the new portable line has an implicit price cut as the $1299 MacBook is probably cannibalizing $1999 MB Pros.). Or the effect of the weak global economy on flash memory prices and thus Apple's margins.
This company has two major, growing, extremely profitable platforms, each creating a virtuous circle as a successful platform can. It has a ridiculous amount of cash and continues to generate it. It controls its own destiny as few companies ever do.
So I bought too early ($129). But if I get to add to that position at $70... bring it on. PCs and pocket sized mobile devices are going to be around for a long time and the Apple franchise has never been healthier. And this ain't some dot-bomb bubble... Apple has proven its ability to "monetize" its franchise into ridiculous amounts of cold hard cash.
Love and science don't mix. Apple is a great company and I understand the love the stock gets. However, the physics of the stock will never bring it back to $200 anytime this decade, or the next. Seriously, have we as a whole learned nothing from multiple compression history?... MSFT owns the very fabric of computer space time and has done so very successfully for oh ..about the last 3 decades now. It got to its top in 2000, At that top price it priced in oh, about another 1 1/2 - 2 decades of upside. Want a crystal ball for AAPL... AAPL it’s your future I see you’re forward P/E at the exciting #9-11 range and you grinding along, compressing at a 60-100 range for probably about a decade. Let me break it down for everyone and explain how stocks work.
Example: Let's say in ten years from now AAPL will have revenues of $100B (2.5x '09 EST.) reasonable right? By this time in the future AAPL will have crushed MSFT and it will be dust, no other competitors that are cooler and newer have come along to take market share from AAPL, and AAPL completely controls the world...everyone still with me?
At this point in the future AAPL will be selling many more units of Macs, Iphones, song downloads and probably something new ( maybe they get into search )you name it they are selling lots of it. And here's the grift advances in technology, competition, and changes in industry standards will make everything they sell much cheaper to make which will compress the price of every unit sold. Thus, 2010 -2020 unit to unit comparisons of revenues will be down. The commodity value of these technologies hits a wall. Which by this time will be evident by the 2007 top. And last but most importantly, the thing at all mature industries eventually get robbed from them is even less profitable margins on top of the drop in revenue per every unit sold. As volumes expand profitability shrinks. Now by the time you are this size, $100B in revenues, catalysts for forward p/e multiple expansion are imposable and it is imposable to bid a stock up much because the real growth days are gone and the shares start trading at the rate of inflation plus or minus a bell or whistle here and there. Short of AAPL developing a matter transporter, or something close in magnitude your shares of AAPL are a dead growth vehicle. To see it break out past 200 again you will have to wait for Obama to take office, get re-elected finish his 2nd term in office, and a new president to get elected and finish there term in office. And guess what, just then, when they leave office, at that point in the future, you can buy AAPL back here in the 90’s.
Love your money, not your AAPL. Trade it. Like you would anything else.
When it gets crushed into dust and burned into ash, buy it. And when the warm glow of product launches and positive news builds momentum and strong price action, sell it. Then if it runs some more, start taking some smaller short positions on it until it fails at resistance and/or displays an abrupt sickly move lower, that you can see from space, and throw on the rest ( the bulk ) of your short position. And use discipline, if the price action is a coin toss, don't play. There are thousand of stocks to buy and short
He knows nothing and poses as an Apple fan and technically savvy power user. He does this to get the confidence of Apple fans to gauge sentiment and create hype that he builds to prep his shorting. If anyone doubts this, check his record and you will see that for the past year he's shorted Apple on the heels of talking it's praise and encouraging confidence. He has deleted all my postings under many disguised user names because he's a shit scared coward and has no balls to face the music. He is a self indulgent and self promoting jerk who is his own number one fan and lover.
Get a real job Zaccccccccccccccch you good for nothing vein bum
I look at the destruction of health created by the likes of her and Zach Bass and it makes it a no brainier to throw their efforts in the same news bin as money manager Bernard Madoff. That might seem harsh.. but they both lie and mislead investors for their own personal gains. Clearly there's no shame for this element in the markets. I would suggest a contrarian position in the market to their calls will eventually lead to their fall. Professionally as well as financially making the markets a better place for honest investors.
> Calling the end to this bear rally is simply a guess. It will end
> when it ends. You cannot make a call such as this.
Well Ames, I beg to differ. I can make any call that I like. Now as to the question of it's validity, it was based on my analysis where I see a break in the current trend. It wasn't a guess, it was a confluence of indicators and patterns that point to a higher probability that this trend is over.
This means yo Zachhhhhhhhhhhhhhhhhhh scumbag