Take Profits In Apple And Don't Look Back

Apr.25.14 | About: Apple Inc. (AAPL)

Summary

We are +18% (approximately) from our AAPL trades this year.

There are conflicting fundamental observations from the company at this time.

But the main catalyst to sell is our fundamental analysis of the market.

We have made a killing this year in AAPL (AAPL), so let's be happy with these gains. After securing gains today, we will have made about 18% from AAPL this year. Darn good I think! This started by shorting the stock near $572 in December, a short signal defined in our real time trading report for AAPL at the time, then we covered and bought it back as it bounced higher from support, and that was rewarded as well yesterday. We were not expecting such an aggressive move all at once, but we will take it.

I did not want to make any knee-jerk decisions yesterday, but since the move in AAPL I have been digging deep and thinking carefully about our AAPL positions, and my conclusion after more thoughtful deliberation is that we should take profits and realize the gain.

There are contributing factors, and one is that it was this $572 level that triggered our short in AAPL back in December. That is almost exactly where the stock is now.

In addition, I do not like the change in culture. They truly are trying to get smaller investors to get in by splitting the stock, and that is not a good sign at all. This could be the sign of a transition by some institutions as they sell into these smaller buyers. Splitting a stock does nothing to enhance shareholder value.

However, there are a few things that AAPL has done to improve shareholder value, and that includes positive EPS results, buybacks, and the Dividend, so I am very aware that there are offsetting factors in this compilation thus far.

Therefore, I was looking for another, and I found it from the market itself. As they say, a rising tide lifts all boats, and as I have said many times before, when the tides shift and the water goes out, all ships are taken down with it. Clearly there will be exceptions, but not many, and I don't think AAPL can be sheltered if the market falls this time.

As a result, our market analysis puts a check in the sell column for AAPL.

Our fundamental macroeconomic analysis is daunting (The Investment Rate), the technicals for the NASDAQ show a broken market, and that combination is the straw that made this decision for me. According to our observations, and now that net real stimulus is officially zero, the market's gain from 2013 could be wiped out.

  • We should be happy with our gains in AAPL.
  • If it goes higher, maybe we will short it again at resistance.
  • If it goes lower, maybe we will buy it again at support.
  • But we will secure gains here and not look back.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: By Thomas H. Kee Jr. for Stock Traders Daily and neither receive compensation for writing this article by the publicly traded companies mentioned herein.