Just before Apple's (AAPL) October 19, 2009 Q4 earnings report, I authored a post entitled "Don't get punked by harpoon throwers." Today -- Friday January 22, 2010 -- I'm reprising my admonition ... now is not the time to get caught up in the fear, uncertainty and doubt (NYSEARCA:FUD) game that's often played on Wall Street. The game was "on" big time this week. Petulant "let's teach Obama a lesson" Street players did their thing on Thursday and Friday. The market's big move down was partly the Street's retribution against the Obama Administration for daring to regulate proprietary trading by banks. Now toss into the "FUD mix" uncertainty over Fed Chairman Bernanke's reappointment, China's move to restrain bank lending, and a few recent corporate earnings announcements that were not "ahead of" (better than) the Street's guesstimates for top line revenues. All nice excuses for institutions and "proprietary trading desks" to rip the market down. And rip they did!
False Apple (AAPL) "downgrade" rumor debunked ... a bit too late
Apple (AAPL), being a large part of the QQQQs, was caught up in today's down draft and was sold and shorted mercilessly, finishing the day down $10.58 (5%). Helping to accelerate the selling was a false report today about Apple (AAPL) being downgraded by Deutsche Bank. This "Apple (AAPL) downgrade" story was pumped widely by the Street echo-chamber (i.e. hedge funds, institutional trading desks and other denizens of Wall Street). It is my opinion that the majority of trading desks understood precisely what happened at Deutsche Bank, but held tight to the truth and may have intentionally misled the financial press (by omission). Here's what really happened. Deutsche Bank took Apple (AAPL) off of its short-term "buy" list this morning (Jan 22). Contrary to media reports, this was NOT a downgrade. Nor was it a negative reflection on Apple's (AAPL's) fundamentals. The removal of Apple (AAPL) from Deutsche Bank's list was purely due to the firm's internal rules, which mandate that a stock cannot remain on the short term "buy" list for more than six (6) months (or "short term" loses its meaning). So Apple's removal from the Deutsche Bank list was an automatic calendar removal and NOT any reflection on Apple's fundamentals. Yet nefarious Street traders playing their book (buying puts and shorting AAPL) made sure the press learned about an "AAPL downgrade" (not a downgrade of any kind) and this only added fuel to the FUD fire.
CNBC's Jim Goldman was the first journalist to call attention to the miss-read of the Deutsche Bank ST buy list removal... yet his "correct the record" report was too late in the day to affect Apple's (AAPL's) close -- down $10.58. Note: Jim Goldman posted a clarification comment on > Apple 2.0
All and all, it was an ugly week for longs ... Apple (AAPL) shares crested at $215.59 on Wednesday and finished the week almost 17 points lower - closing today (Friday Jan 22) at $197.75.
My suggestion to Apple (AAPL) shareholders is to be very careful before acting on the advice of those who claim that it's time to give up your shares. After this week's action, shareholders with "weak hands" (those easily spooked into selling when fear reigns down) might be tempted to place sell orders before the market opens on Monday. My advice to you is "don't get punked!" Apple is due to report Q1 2010 earnings on January 25, 2010 (Listen to Audio Webcast at 2 p.m. PST) and two days later (January 27) Apple will host a special event at the Yerba Buena Center for the Arts in San Francisco - "Come see our latest creation" where they will almost certainly unveil the much anticipated iTablet device (name TBA). Those who sell now will be giving up their AAPL on the cheap to institutional traders and hedge funds who are now poised (finger on the button) to cover their short positions with your shares.