Seeking Alpha

Ed Pandos'  Instablog

Ed Pandos
Send Message
As a seasoned, long term and profitable trader I’ve had the opportunity and privilege to know, interact, and learn from traders with vast degrees of experience and knowledge. I have learned so much from listening, asking questions, and sharing my knowledge in an effort to become even more... More
My blog:
Pitbull Wizard
View Ed Pandos' Instablogs on:
  • Apple (AAPL) Nothing Is Wrong With This Fruit

    Apple (NASDAQ:AAPL) the investment gift that keeps giving for over 10 years now is currently just taking a healthy rest. Apple is the perfect stock that cycles twice a year. Usually a leg up in the fall and then another early in the year taking a corrective break in the summer months. Currently Apple is experiencing a pull back along with the broader market after a run up that began early in 2012. This is a healthy needed adjustment for the next leg up.

    There was much speculation of the reasons why Apple has pulled back 16% for it's recent top. One of the speculative reasons was that institutional investors were raising money for the recent Facebook (NASDAQ:FB) IPO.

    Before we look at the Technical reasons why Apple's pull back is very normal and healthy we need to remind ourselves fundamentally that Apple is and will be going into the future one of the most important stock to own in our portfolios. First lets take a look at the most basic building blocks of a company's fundamentals revenue and profits from this chart, we can see that since 2008 quarterly revenues have grown from $7.5 billion to $46.3 billion. The next puzzle piece to be reminded of shows that since 2009, quarterly profit has grown from $1.21 billion to $13.06 billion.

    The most common argument to this data is simply that Apple cannot continue to grow in this manner. While this maybe debatable, that past performance is not indicative of future performance there is currently no signs of Apple stumbling. Growth products (IPHONE) and new product introductions are fueling Apples balance sheets. The following chart show that AAPL revenue and profit continue to grow quarterly (Q3 2011/Q32010) at 155% and 200% respectively. Whenever a slowdown occurs, we should see the data in the earnings numbers. All the data suggests that Apple is and will be a growth stock into the future.

    Technically, Apple is experiencing a health pullback and can even fall further and nothing will be remotely wrong with the Apple chart. Starting at a chart that most technical analysis don't even look at a 5 year monthly chart it's easy to see that Apple is comfortable in an up trend. Even in the 2008 / 2009 downtrend Apple easily bounced off the 50 DMA making Apple the buying opportunity of the decade. A yearly / monthly chart paints a more recent realistic picture of Apple's share price appreciation. This chart shows that the 25 DMA is very relevant point of interest where investors start to bid Apple's price. Apple can easily fall to the 50 DMA and nothing at all would be wrong with the Apple chart.

    Taking a microscope to the Apple chart and looking at 2 more charts a 6 month weekly and a 6 month daily we would finally conclude that in the weekly chart Apple is coming in for a nice soft landing around the 25 DMA or 520 area. Will Apple head up for here over the next few weeks? That would be the million dollar question but at least at this point in time you have a nice trade range defined between low of 520 and 580. If the 520 point is breached the 50 DMA would be the next point of great interest in Apple. Looking at the 6 month daily chart Apple is in a corrective down trend and you can easily define the 520/ 580 range. Currently Apple is just bouncing off the bottom range and it is not normal for any stock to continue straight up. The projected current path is side ways / range bound but that is always dependent on the broader market outlook too. There should be no rush currently to purchase Apple since it's at the top of the range. Apple needs to adjust sideways after the recent run and place a healthy higher base to get ready for the next accent higher which is usually around earnings.

    Apple like any stock is at the mercy of the broader market and any negative call by an brokerage concerning Apple would have a negative impact on it's current price too but currently Apple is experiencing a health price adjustment that may take a few months to play out. The best long term strategy is to wait until Apple trades comfortably above the 20 and 50 DMA nibbling at small quantities at the lower 520 range price.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

    Tags: AAPL, FB, long-ideas
    May 31 6:52 PM | Link | Comment!
  • 1000 Share Price First AAPL, PCLN Or GOOG

    There are three companies that have been the talk of Wall Street this year about which one will make it to the 1000 dollar share price first. They are Apple (NASDAQ:AAPL), Priceline (NASDAQ:PCLN) and Google (NASDAQ:GOOG). The reasons for these three being aggressively bought on each pull back is different for each company but all three represents a thrill ride to 1000.

    APPLE

    Apple has been the darling of Wall Street for years now. With their introduction of a new product innovation every year consumers form lines outside the Apple Stores and compete to be the first on their block to own the newest Apple innovation. Fundamentally, Apple AAPL after years of growth and momentum is still the strongest on the block.

    With a 40% Gross Profit Apple adds large amounts of cash to their already 100 billion dollar bank account. The current EPS is 10.44 cents per share but is expected to swell next fiscal year to $53.47 per share. Apple's growth rate is tremendous at 70% and that is what is going to take the share price into the stratosphere. Apple represents the 800 pound gorilla in the room when it comes to the $1000 dollar share club. Apple is a very strong growth and momentum play with the possibility of $1000.00 per share in the next 18 months.

    PRICELINE

    Priceline has been one of the darling momentum trades for 2012 appreciating 61% in 4 short months. Priceline is the undisputed market leader in the online travel business for years now. If you compare AAPL, GOOG and PCLN as far as growth PCLN by far beats the two prior companies the past 5 years. With Priceline having 1700% growth over Apple's 437% and Google's 42%.

    Fundamentally Priceline is a bit more challenging. Price line has a 70% Gross Profit margin which like APPLE adds a good deal of free cash flow to their balance sheet. Current EPS is 7.39 but like APPLE, Priceline is expected to swell to $39.50 next fiscal year. Priceline represents a real threat to beating Apple to the $1000 dollar benchmark share price and with a strong growing economy where individuals are spending income on travel Priceline is the clear market winner.

    GOOGLE

    Google used to be the 800 pound gorilla in the room that everyone talk about closing in on the $1000 share price first. Before the recession hit in 2007 Google topped the 750 share price. The recession with corporate ad spending at a minimum and a few questionable product investments has made Google the long shot of the 3. Currently ad spending is on the rise and new smart phones are bringing Google back into the race.

    Fundamentally Google is strong. Google boosts a 65% Gross profit margin. Current EPS is $10.19 with like Priceline and Apple is expected to rise dramatically to $50.71 next fiscal year. Google has been trading erratic lately too. Earnings misses and blow outs have made Google the unpredictable one of the three. Don't rule Google out yet, they can easily recapture the 750 share price again and make a move to the $1000 dollar share price prize.

    Three great growth momentum companies, three real possibilities that all three can get to the 1000 Dollar share price. All three will be the darlings of the Wall Street for some time to come due to great growth possibilities.

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

    Tags: long-ideas
    May 21 3:48 PM | Link | Comment!
  • Is JP Morgan Ready To Be Bought?

    The first part of the year gave us a clear signal that the Banks were coming out of a long awaited reversal pattern. The XLF gave us a clear sign in early January.

    Two of the "Best of Breed" banks leading the charge were Wells Fargo (NYSE:WFC) and JP Morgan (NYSE:JPM). Today we're are going to choose JPM to take a closer look at. We are looking at this Best of Breed company to see if the time is right to start scaling into a position after the recent pull back.

    We will be looking at 2 views of JPM a Weekly and the Daily. Looking back to early April JPM began a top pattern and began to pull back with of the rest of the market. Even though JPM declared great earning JPM was a sell the news in April Earning. This was to no surprise since several other bellwether companies were sell the news this earnings season.

    As we let JPM continue to show us when the time is right we can see that on April 23 during a rather triple digit tape loss JPM was able to trade up a small gain. This 50 DMA bounce is significant and I would expect further follow through in JPM in the near term. But, as the chart shows JPM is broken right now, 44 is going to be difficult resistance to push through.

    Looking at the Weekly chart we see an entirely different set of possible out comes. We see a stock that may still be in corrective mode. Until JPM prints a Black open box, caution still needs to be on the down side with JPM. We have not seen this possible reversal pattern yet.

    So what to do? If your a longer term trader you need to stand aside s with JPM until we get a clearer weekly buy reversal pattern. If your a shorter term holder JPM should If your a shorter term holder JPM should have some follow through up to 44 but until JPM moves through 44 and holds buyers need to beware of further downside possibilities.

    Disclosure: I am long JPM.

    Tags: JPM, XLF, Banks, buys, holds, wfc, jpm
    Apr 24 12:59 AM | Link | Comment!
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.