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Danny Furman
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Danny is a high performance coach at Arora Tennis and Fitness in Dublin, California. He observes markets and sometimes draws conclusions.
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  • Time To Sell Apple

    iPhone 6 sales have propelled the investing world's core holding to all time highs and, while shares remain substantially lower than bullish analyst estimates, Apple (NASDAQ:AAPL) is the worlds richest company.

    Traditional valuation metrics make AAPL look cheap based on earnings and growth. A globally integrated, highly diversified company such as 3M (NYSE:MMM) or Johnson and Johnson (NYSE:JNJ) would likely garner a valuation more than double that of Apple with similar earnings and growth. Apple however, much like dying elephant of yesteryear Sony (NYSE:SNE), does not have the shelf life of a company that produces more affordable and more essential goods and services.

    Developed markets are fully saturated with iPhones and Mac computers. As highly touted as the wearables market is it is still unproven. Emerging markets are struggling and we do not live in a world where selling a product for over $500 in one country and under $100 in another is feasible.

    At a glance the AAPL chart looks very bullish. The stock has maintained a strong uptrend since early 2009 and currently trades at an all time high. Recent performance, however consistent, has been rather muted and can be described as a "quiet blow off top." The stock has gone parabolic 3 times in the last 10 years. After doing so in 2007 more than all of the gains were lost in 15 months. The process occurred again from January to August of 2013 followed by a 100% retracement. The latest parabolic move began in October 2014 and appears to be topping.

    After a pop on recent earnings and a 75 million iPhone quarter reported in late January, shares of Apple have yet to see a 1% down day. The rally has been relatively muted as well, as shares have risen an additional 10% in 11 trading days. Apple is not a quiet company and this has been a very quiet rally during a very questionable time for global economic growth.

    Market breadth has been poor given an S&P (NYSEARCA:SPY) at all time highs and Nasdaq (NASDAQ:QQQ) at 15 year highs, both of which can be attested largely to AAPL. With little in terms of positive catalysts on the horizon, this quiet rally may be a generational opportunity to sell.

    Tags: AAPL, SPY, JNJ, MMM, QQQ
    Feb 13 1:04 PM | Link | 4 Comments
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