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The Apple Investor blog is the creation of Ernie Varitimos, he provides daily market analysis and insight. Ernie has over 30 years experience in technology, finance and securities trading.
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  • Bulls Blocked, AAPL Falls Late, Trend Continues

    When a stock or index are trending and moving through a well defined channel, there are going to be days that make you happy, and days that make you scratch your head. Those moments of uncertainty can make our jobs as traders extremely frustrating. That uncertainty and frothiness is our achilles heel; head fakes, gap-ups, dips into the fire, popping back out, it can make your head spin and question your resolve.

    Sure, the market was up yesterday, and that's a good thing, right? Well, yes and no. It's definitely better to have an up day over a down one, but when the Bulls have every opportunity to bring it, and they fail, that up day can seem fruitless and frustrating. In this case, the failure was to break through critical resistance (S&P that is 1113) for a third time in as many weeks. Some are calling that behavior a Triple Top, a pattern that signals a bearish reversal.

    So, while it's a good thing the markets saved themselves from losing critical support in the 50 day exponential moving average, it's definitely not a good thing failing to break through resistance for the third time. So, is it a Triple Top? I don't think so, Triple Tops that result in market reversals are usually formed over months, not days. So, if this is a Triple Top, the reversal will have that kind of scale, that is the reversal won't be very big if at all.

    What's Up With AAPL
    Our favorite stock looked pretty good over most of the session, although a little disappointing that it wasn't keeping pace with the indexes or other leaders in the tech sector through the day and after a healthy Gap-Up. But right at the end of the session, the bottom fell out of AAPL leaving many scratching their heads. I got tons of email asking what happened, the Apple discussion groups around the web were in a buzz. What caused AAPL to drop almost 2% in just a few minutes.

    Well it turns out that a news item hit the street. It reported that Apple was considering adding a second US mobile carrier in 2010, and it wasn't Verizon, but the black sheep of carriers, T-Mobile. Investors got spooked over this prospect, with the AT&T exclusivity deal nearing expiration, and with the thinking that Apple margins would take a hit with such a deal. Here's a pull quote from AppleInsider:

    While rumors of a possible Verizon-compatible iPhone in 2010 persist, one analyst (Doug Reid of Thomas Weisel Partners ) has predicted that Apple will instead bring the iPhone to another GSM-based carrier in the U.S.: T-Mobile.

    In a research not, Reid said; "AT&T has likely realized this, he said, and has changed its advertising focus accordingly to be less focused on the iPhone." Man these investors are a nervous bunch. Isn't it a good thing that Apple is expanding its reach to new customers, even if it is with a sub-standard carrier? I would think this would put even more pressure on Verizon to consider partnering with Apple.
     



    Disclosure: Long AAPL
    Tags: SPX
    Dec 02 10:34 AM | Link | Comment!
  • Top AAPL Analyst Muddies Black Friday Results
     Yesterday I reported initial retail reports, for all retailers, were positive. Most analysts said it appeared that although it wasn't spectacular, the observed about a 0.5% uptick in sales. Well today, as usually the case with initial results, we have revisions showing that retail sales were actually down from last year. The Wall Street Journal reported the following:
    Trade group National Retail Federation said Sunday that while 195 million shoppers--13% more than last year--visited stores and Web sites over the Black Friday weekend, the average spending over the weekend declined 7.9% to $343.31.
    On the consumer electronic retailer front, there were mixed reporting results. Some thought things were better than 2008 Black Friday; most thought things were pretty much the same.
    Consumer sampling at several consumer electronics retail locations by CEA and ChannelForce found nearly 40% of consumers believed traffic this year was heavier than last Black Friday and nearly 80% believed it was at least as busy, if not more so, than last year.
    AAPL Analysts Mixed I visited two Apple stores on Friday, in the metro Boston market, and it was shoulder-to-shoulder the whole time I was there. Now this isn't scientific by any means, and is not uncommon for Apple stores even on days where there's no special event going on. But more adroit analysts performing customer counts across a vast cross section of Apple stores report mixed results.
    Piper Jaffray's Gene Munster and team did a head count at three Apple Stores and reported much weaker numbers compared to last year, his team counted an average of 8.3 Mac sales per hour, down 36% from the 13 Macs per hour they observed on the same day last year. He offset that with comScore numbers; which showed sales at Apple's online store Friday were up 39% over last year.
    Kaufman Brothers analyst Shaw Wu reported that many Apple Stores were so busy that they were running out of stock, which makes him think that his estimate for 2.9 million Macs this quarter could be a very conservative estimate. Wu reiterated Kaufman's BUY rating and target price of $235.
    Deutsche Bank analyst Chris Whitmore says that Apple sales were healthy. He says in a research note that Apple stores were packed and the recently refreshed MacBook and 13-inch MacBook Pro were the most popular items. Demand for iMacs was also strong. Whitmore reported the following in a research note:
    Channel checks were carried out at 120+ Apple retail stores and 25+ AT&T stores in conjunction with a series of online checks (Apple, Amazon, Best Buy, MacMall, Target and Wal-Mart). Our checks show demand for Macs, iPhones and iPods remains healthy and Apple stores enjoyed heavy traffic throughout the holiday weekend.

    Thomas Weisel Partners analyst Doug Reid says they did store checks at 41 Apple retail locations in the U.S., Canada and the U.K., and came away "with increased confidence" in his above-Street December quarter estimates and in his long-term positive thesis on the stock. He says the checks suggest same-store sales are up slightly year over year. Well, 41 stores in three countries. That seems reasonable. Is the Munster Team Blind? So how is it that Gene baby got it backwards from what I was seeing, and what Wu and Whitmore reported? It probably has a lot to do with sampling size and methodology. It's obvious that Deutsche Bank did their homework, and got a very healthy look at Friday's sales through both direct and indirect means, where Munster and Wu both performed scanty, insufficient studies.
    That's the problem with analysts; you love them while they tell you what you want to hear, even though you may not understand that what you’re hearing may not have any basis in truth, at least a truth that should be garnered through meticulous research.
    So, what I'll be doing in the near future here on the AppleInvestor is compiling the rants, raves and musings of ALL the predominant AAPL analysts and keep that up-to-date for you, so that you can make your own judgment from a consensus. Perhaps we'll even rate their predictions over time, then we can put a weighting on their future predictions based on past results. Hmmm, nice idea Ern.


    Disclosure: Long AAPL
    Tags: AAPL
    Dec 01 8:07 AM | Link | Comment!
  • Top AAPL Analyst Muddies Black Friday Results
     Yesterday I reported initial retail reports, for all retailers, were positive. Most analysts said it appeared that although it wasn't spectacular, the observed about a 0.5% uptick in sales. Well today, as usually the case with initial results, we have revisions showing that retail sales were actually down from last year. The Wall Street Journal reported the following:
    Trade group National Retail Federation said Sunday that while 195 million shoppers--13% more than last year--visited stores and Web sites over the Black Friday weekend, the average spending over the weekend declined 7.9% to $343.31.
    On the consumer electronic retailer front, there were mixed reporting results. Some thought things were better than 2008 Black Friday; most thought things were pretty much the same.
    Consumer sampling at several consumer electronics retail locations by CEA and ChannelForce found nearly 40% of consumers believed traffic this year was heavier than last Black Friday and nearly 80% believed it was at least as busy, if not more so, than last year.
    AAPL Analysts Mixed I visited two Apple stores on Friday, in the metro Boston market, and it was shoulder-to-shoulder the whole time I was there. Now this isn't scientific by any means, and is not uncommon for Apple stores even on days where there's no special event going on. But more adroit analysts performing customer counts across a vast cross section of Apple stores report mixed results.
    Piper Jaffray's Gene Munster and team did a head count at three Apple Stores and reported much weaker numbers compared to last year, his team counted an average of 8.3 Mac sales per hour, down 36% from the 13 Macs per hour they observed on the same day last year. He offset that with comScore numbers; which showed sales at Apple's online store Friday were up 39% over last year.
    Kaufman Brothers analyst Shaw Wu reported that many Apple Stores were so busy that they were running out of stock, which makes him think that his estimate for 2.9 million Macs this quarter could be a very conservative estimate. Wu reiterated Kaufman's BUY rating and target price of $235.
    Deutsche Bank analyst Chris Whitmore says that Apple sales were healthy. He says in a research note that Apple stores were packed and the recently refreshed MacBook and 13-inch MacBook Pro were the most popular items. Demand for iMacs was also strong. Whitmore reported the following in a research note:
    Channel checks were carried out at 120+ Apple retail stores and 25+ AT&T stores in conjunction with a series of online checks (Apple, Amazon, Best Buy, MacMall, Target and Wal-Mart). Our checks show demand for Macs, iPhones and iPods remains healthy and Apple stores enjoyed heavy traffic throughout the holiday weekend.

    Thomas Weisel Partners analyst Doug Reid says they did store checks at 41 Apple retail locations in the U.S., Canada and the U.K., and came away "with increased confidence" in his above-Street December quarter estimates and in his long-term positive thesis on the stock. He says the checks suggest same-store sales are up slightly year over year. Well, 41 stores in three countries. That seems reasonable. Is the Munster Team Blind? So how is it that Gene baby got it backwards from what I was seeing, and what Wu and Whitmore reported? It probably has a lot to do with sampling size and methodology. It's obvious that Deutsche Bank did their homework, and got a very healthy look at Friday's sales through both direct and indirect means, where Munster and Wu both performed scanty, insufficient studies.
    That's the problem with analysts; you love them while they tell you what you want to hear, even though you may not understand that what you’re hearing may not have any basis in truth, at least a truth that should be garnered through meticulous research.
    So, what I'll be doing in the near future here on the AppleInvestor is compiling the rants, raves and musings of ALL the predominant AAPL analysts and keep that up-to-date for you, so that you can make your own judgment from a consensus. Perhaps we'll even rate their predictions over time, then we can put a weighting on their future predictions based on past results. Hmmm, nice idea Ern.


    Disclosure: Long AAPL
    Tags: AAPL
    Dec 01 8:06 AM | Link | Comment!
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