by Gavin M.
I'll try to be as objective as possible in this post. Everybody's favorite stock reports earnings tomorrow. Everyone including their grandparents are going to watch with great anticipation what Timmy Cookie will say to all the Apple drones and investors.
The AAPL chart is below. The highest price target for it currently is by FBR (please correct me if I'm wrong) at $187. Already the armchair, faux MBA twitter millionaire traders are already saying it is still way undervalued at $187. You know, because nothing says it's a damn bubble when a company that has really made NOTHING NEW is worth $187.
I don't mind if AAPL does go up to $200 heck, even to $700 by end of the year. I want to help the bulls realize that dream of having no more down days. With Janet Yellen and her super friends at the bid, why would anyone want to sell? Here's the main reason why I think AAPL, regardless of whatever happens, will always catch a bid: EGO. Everyone and I repeat, everyone on wall street is balls deep LONG Apple shares. They have their credentials, their expertise and their egos on the line. These folks have killer instincts and would never want to be proven wrong. They will average down Warren Buffet style if Apple does drop after the earnings report.
I told you, I am being objective here. The permabear in me would just say I hope AAPL stock dies tomorrow. But I am being practical. What is far worse than shorting a stock at highs? Shorting a stock loved by a vast majority of hedge funds with billions on the line.
If Apple (heaven forbid) pulls back significantly after earnings, watch as the morlocks buy it hand over fist. If it beats, watch as they take it higher a la Netflix. I do not think we have reached peak insanity yet in the tech 'bubble'. Imagine Apple stock as that really popular club in your city. It's way overcrowded, it's way over capacity yet the lineup is still a mile long. Nobody wants to get out, everyone wants to get in. They need a significant event to get people out of there. Usually there are three ways to get people out of a club: 1. A Fire 2. A Fight 3. Party's Over. Not any one of these exogenous shocks have happened yet for Apple and that therefore is the reason why I cannot foresee Apple crashing hard. When I say crashing hard, I mean we hit $90 hard.
Before you say, "Geeze, did Gavin just become a bull?" I will say with a roaring voice, HELL NO. I trade AAPL almost every week. I am not an investor. I am not buying to hold for a long time at pullbacks. Why would I bother worrying about what happens to my investment when I can eke out $1000-$4000 each time I trade AAPL? Take for example my trade on Friday, April 24th. AAPL crashed 50-70 cents at open, I was able to make about 35 cents a contract on my Puts which roughly translated to about $1,700 in profits in just 10 minutes of work.
The recommendation for AAPL is just to be ready. In a stock market where GOOGL and AMZN get rewarded for having horrible earnings, bad is good and good is good. The logical conclusion continues to be BUY BUY BUY. Somewhere, Jimmy Cramer is laughing....
Good luck to all of you on AAPL tomorrow. May the Force be with you.
Traders from Equity Sense will be writing on this blog on positions and other market-related things.