AAPL looks good for a bounce

[Mr. Crabs]

The final arbiter is price movement. This is when people place their bets. So far, AAPl is showing a series of lower lows and lower highs, in other words sellers are outstripping buyers. Whilst there is support at $420 region, the bounce off that level is weak suggesting weak demand. We won't see strong support until we get to the $365 price point. That place was prior take off point that drove prices to the $700 level.

I'm thinking AAPL will see $300 before it sees $700.

 

[Brumby]

I'm thinking AAPL will see $300 before it sees $700.

I am not in the forecasting business. Whether AAPL will see $700 again is not the primary concern. If I were to trade AAPL on the long side, I would be looking for strong support around $365 (potential long) with protective stop @ $300 just below the immediate swing and a price target to $570 where I expect strong resistance. This will give me a RR of approximately 3.2. $700 at this stage is wishful thinking.

 

[Purple Brain]

Interesting. Why would a special dividend be a sell scenario?

For two reasons. Any stock ex-dividend is always at a lower price than pre-dividend - the bonus has already been paid. Plus in AAPL specific case, it will be considered as a bad use of investment capability (cash) as paying special dividends means that cash is lost - can never be used again to generate further profits for the company. R&D or acquisitions or even buy-backs are a positive move and would generally push the stock price up.

 

[willmoss]

For two reasons. Any stock ex-dividend is always at a lower price than pre-dividend - the bonus has already been paid. Plus in AAPL specific case, it will be considered as a bad use of investment capability (cash) as paying special dividends means that cash is lost - can never be used again to generate further profits for the company. R&D or acquisitions or even buy-backs are a positive move and would generally push the stock price up.

Well if they announce a special dividend, thats going to push up the stock price right? Im not talking about cum and ex dividend, Im just talking about whether the stock price is going to go up.

Regarding the second point, for R&D AAPL has always maintained that as a tech company it doesnt need a lot of cash for R&D (this has been one of Steve Job's key points in the past) - especially not the amount of cash it has right now. You'll see this if you read David Einhorn's investor presentation on his iPrefs idea.

A good company is one that returns as much profits as possible to shareholders, in my opinion. As a shareholder Id rather have cash returned as dividends or buybacks than have it potentially wasted on acquisitions.

For example, did you read what Yahoo did the other day buying some ridiculous app company for $30m? That is exactly what I would NOT want to see from AAPL.

So I'm sorry, I disagree with you when you say a special dividend would be bad for the stock.

 

[Purple Brain]

I’m always interested in others’ ideas, especially when they’re at 180 degrees to my own. So please don’t take my response as being in any way adversarial, it’s not, I’m just finding my way around this topic.

Well if they announce a special dividend, thats going to push up the stock price right? Im not talking about cum and ex dividend, Im just talking about whether the stock price is going to go up.

I said it would be a sell scenario, but the stock would most likely rise on any announcement of special dividend. Depending on whether it’s classed as a return of capital or not and the split of those wanting to take the dividend in cash or stocks and those preferring to sell on the rise, forego the dividend and take the capital gains. For me it would be a sell as I do not own the stock, expect it to rise to a level from which, when it falls, it will do so rapidly and will unlikely reach again in the short term. A fairly safe one way bet.

Regarding the second point, for R&D AAPL has always maintained that as a tech company it doesnt need a lot of cash for R&D (this has been one of Steve Job's key points in the past) - especially not the amount of cash it has right now. You'll see this if you read David Einhorn's investor presentation on his iPrefs idea.

Einhorn’s Hedge Fund is the prime mover in attempting to force AAPL to shed its cash in the form of shareholder dividend. He’s unlikely to be doing anything other than singing from that hymn sheet. As for R&D, it is the lifeblood of technology firms so I’m not sure why Jobs would have ever claimed that. Not disputing your claim, just surprised.

A good company is one that returns as much profits as possible to shareholders, in my opinion. As a shareholder Id rather have cash returned as dividends or buybacks than have it potentially wasted on acquisitions.

Shareholders and stock speculators are different animals. A shareholder focussed on short-term gains rather than long-term growth, which appears to be the norm these days, would obviously prefer a steady flow of income from their investment. A speculator would prefer an active and volatile stock from which to benefit from strong momentum, regardless necessarily of direction.

For example, did you read what Yahoo did the other day buying some ridiculous app company for $30m? That is exactly what I would NOT want to see from AAPL.

What the SUMMLY app? Who knows what that might be worth to them longer term. It also might be a dog of course. But it is active acquisition rather than passive cash hoarding which benefits nobody.

So I'm sorry, I disagree with you when you say a special dividend would be bad for the stock.

See above. I said it would be a sell scenario (for me) and yes, ultimately, negative for the stock price.

 

[Mr. Crabs]

Well if they announce a special dividend, thats going to push up the stock price right? Im not talking about cum and ex dividend, Im just talking about whether the stock price is going to go up.

Regarding the second point, for R&D AAPL has always maintained that as a tech company it doesnt need a lot of cash for R&D (this has been one of Steve Job's key points in the past) - especially not the amount of cash it has right now. You'll see this if you read David Einhorn's investor presentation on his iPrefs idea.

A good company is one that returns as much profits as possible to shareholders, in my opinion. As a shareholder Id rather have cash returned as dividends or buybacks than have it potentially wasted on acquisitions.

For example, did you read what Yahoo did the other day buying some ridiculous app company for $30m? That is exactly what I would NOT want to see from AAPL.

So I'm sorry, I disagree with you when you say a special dividend would be bad for the stock.

Well I for one can't imagine a special dividend being bad for the stock price before it the due date, but on the other hand heavy positions may continue unloading as many shares as the market will sustain while not sending the stock price down before then, so all in all the stock price could stay relatively flat until the dividend comes out, and the day after that AAPL could continue downwards.

I wouldn't buy AAPL long at this time.

Not until the next market correction bottoms.

Maybe AAPL long-term trend will reverse after the PPS has dropped into the low $300's.

But before then I have no reason to believe we are anywhere near the bottom.

Keep in mind the market cap is still $450 BILLION. That makes for a ton of potential sellers.

 

[willmoss]

Well I for one can't imagine a special dividend being bad for the stock price before it the due date, but on the other hand heavy positions may continue unloading as many shares as the market will sustain while not sending the stock price down before then, so all in all the stock price could stay relatively flat until the dividend comes out, and the day after that AAPL could continue downwards.

I wouldn't buy AAPL long at this time.

Not until the next market correction bottoms.

Maybe AAPL long-term trend will reverse after the PPS has dropped into the low $300's.

But before then I have no reason to believe we are anywhere near the bottom.

Keep in mind the market cap is still $450 BILLION. That makes for a ton of potential sellers.

DISCLAIMER: I am long AAPL.

AAPL may go lower, but at these prices I think it is just ridiculous.

I went out to buy the latest Android Samsung Galaxy S3 and Samsung Note tablet on Friday, along with the Iphone 5 (I already own a Macbook Pro and a iPad). Having played around with them, I would no way say that the Iphone 5 is out of the smart phone race. Yes there are some functions for which the Samsung phone/tab are better, no doubt - like Google Maps and *maybe* the browser on the phone (just because the screen is a bit bigger - but definitely not on the tablet). However I would not be able to use either of these products because the software is atrocious. It may have more settings, but try writing a text message or an email, or surfing the web on either of these devices and you will go crazy. I was trying to surf the web on the Galaxy Tab whilst lying in bed - like I usually do with the iPad. It was a painful experience. Most web pages do not display properly, and there is no auto zoom on most of them, meaning you have to hold the tab close up to be able to read some of the text.

The only advantage of Android devices as I can see is that the map function is better (Google Maps) and you can change more of the settings (for example, you can add a VPN, which might be useful).

Right now I cannot see a consumer using either of these devices long term. Maybe they will buy initially because of the low price or the hype, but I guarantee they will be returning the product soon and switching to an iPhone or iPad. That was born out in my experience - I actually witnessed a consumer returning a Galaxy Note product when I was in the retail store (not a good sign), whilst in the Apple store there was a queue of customers waiting to buy the product (and I had to wait just to see a salesman - and this was in the regent street branch). Indeed I have not seen anybody in public using a Samsung S3 or Tablet, but almost everybody uses an iPhone or iPad.

I am not sure how much longer the market is going to remain irrational over AAPL, but Im sure that as they release their earnings the picture will become clearer that they are taking more market share AWAY from Android, not the other way round. With such a high profile stock, I cannot believe that it will remain at such low prices for much longer. (my guess is the situation will reverse by the end of the year).

However I would have to say that there is a good chance that in the short term that the bears have it - so probably you're right about shorting AAPL until it bounces. Id be ready to cover though because it WILL bounce at some point. The bearishness is ridiculous on this stock - I am looking forward to seeing all those shorts feel the pain of a nice rise. As a longer term play this is about the most obvious buy I have ever seen.

 

[Mr. Crabs]

DISCLAIMER: I am long AAPL.

AAPL may go lower, but at these prices I think it is just ridiculous.

I went out to buy the latest Android Samsung Galaxy S3 and Samsung Note tablet on Friday, along with the Iphone 5 (I already own a Macbook Pro and a iPad). Having played around with them, I would no way say that the Iphone 5 is out of the smart phone race. Yes there are some functions for which the Samsung phone/tab are better, no doubt - like Google Maps and *maybe* the browser on the phone (just because the screen is a bit bigger - but definitely not on the tablet). However I would not be able to use either of these products because the software is atrocious. It may have more settings, but try writing a text message or an email, or surfing the web on either of these devices and you will go crazy. I was trying to surf the web on the Galaxy Tab whilst lying in bed - like I usually do with the iPad. It was a painful experience. Most web pages do not display properly, and there is no auto zoom on most of them, meaning you have to hold the tab close up to be able to read some of the text.

The only advantage of Android devices as I can see is that the map function is better (Google Maps) and you can change more of the settings (for example, you can add a VPN, which might be useful).

Right now I cannot see a consumer using either of these devices long term. Maybe they will buy initially because of the low price or the hype, but I guarantee they will be returning the product soon and switching to an iPhone or iPad. That was born out in my experience - I actually witnessed a consumer returning a Galaxy Note product when I was in the retail store (not a good sign), whilst in the Apple store there was a queue of customers waiting to buy the product (and I had to wait just to see a salesman - and this was in the regent street branch). Indeed I have not seen anybody in public using a Samsung S3 or Tablet, but almost everybody uses an iPhone or iPad.

I am not sure how much longer the market is going to remain irrational over AAPL, but Im sure that as they release their earnings the picture will become clearer that they are taking more market share AWAY from Android, not the other way round. With such a high profile stock, I cannot believe that it will remain at such low prices for much longer. (my guess is the situation will reverse by the end of the year).

However I would have to say that there is a good chance that in the short term that the bears have it - so probably you're right about shorting AAPL until it bounces. Id be ready to cover though because it WILL bounce at some point. The bearishness is ridiculous on this stock - I am looking forward to seeing all those shorts feel the pain of a nice rise. As a longer term play this is about the most obvious buy I have ever seen.

The market cap is still over $400 billion and the market is nearing a top; need I say more?

I would be careful going long with AAPL at these prices.

 

[Brumby]

DISCLAIMER: I am long AAPL.

AAPL may go lower, but at these prices I think it is just ridiculous.

There is a saying "the market can remain irrational longer than you can remain solvent". One obviously can justify anything but be extra careful when you have a bias - it is just natural human behaviour at work.

If you are investing on the basis of fundamentals then I suggest you stick to basic financial performance indicators such as prospective PE relative to industry peers. If it is a value proposition, then average in your investment because eventually the fundamentals will drive prices according to its intrinsic valuation. Trying to make sense of Android et. al technology and consumer demand is just trying to justify a view with no inherent correlation to its valuation. You might as well buy an analyst's valuation report as they do a better job.

Currently AAPL is in a downward trajectory, representing a sum of market opinion. You may think it is foolishness because AAPL deserves better but you have what you have - that is reality. AAPL may eventually turn around in its share price or may turn out to be a Motorola or Nokia. No one knows and its the risk of investing. Have a carefully considered plan and just follow your own plan. Just ensure is a measurable plan and actionable. Having a view that current price of AAPL is ridiculous is not a plan - it is an opinion. Markets do not care about our opinion - it will do what it wants to do. You can say it is ridiculous when it continues to tank and buy more but just remember what happened to Enron. What is your exit strategy in your plan?

 

[Purple Brain]

DISCLAIMER: I am long AAPL.

When I started out investing rather than trading I had a stock which had done well by me for some time, but was pulling back. I sought opinions that supported mine that this old friend of a stock wouldn’t let me down after all the good times and found myself debating heatedly with those who offered opinions and advice that did not support my view. Suffice to say I got out, eventually, when reality had bitten hard and I had given back all of my previous cumulative profits, and then some. . Is there perhaps a possibility you’ve become married to your position?

AAPL may go lower, but at these prices I think it is just ridiculous.

FB buyers were saying the same thing for quite some time. Of course, it did go lower as could AAPL. And your comments about iOS versus Android are just not borne out by current market share and trends in that market space. You appear to be hoping future data release will support your view, which is currently at odds with the reality.

If you didn’t hold AAPL stock right now, would you be buying?