Wednesday, 03/27/13: $452.11

[lovemyipad]

Mar 27, 2013 16:44:34 GMT -8 marcellus said:

Sorry, but it's naive to think TA practitioners are buying and selling in response to what everyone else is doing.

Tell me that after you actually learn some TA.

[Deleted]

Mar 27, 2013 17:07:58 GMT -8 lovemyipad said:

Mar 27, 2013 16:44:34 GMT -8 marcellus said:

Sorry, but it's naive to think TA practitioners are buying and selling in response to what everyone else is doing.

Tell me that after you actually learn some TA.

Haha, I'll pass. I want a stock to trade on fundamentals; Apple doesn't, sadly.

[bud777]

I have posted this paper before, but i don't think many read it.

www.systemdynamics.org/conferences/2007/proceed/papers/WEITE454.pdf

As we try to understand the stock price behavior, there are generally two fundamentally different approaches. Both have limitations. The first is based on the same reductionist principles that serve us so well in other sciences. Understand the pieces, understand how they interact, and then you can predict how the system will work. This requires a theory about how the pieces interact, and validating the theory requires either the ability to conduct experiments or sufficient non-experimental data to conduct significant statistical analysis. In the stock market, we don't really have either. The closest thing we have to theory is that people will evaluate the fundamentals according to an agreed upon standards like DCF, and then will react in a rational manner. This ignores the unquantifiable effects of fear and greed and momentum. Thus we see phenomena like Apple beating projections and falling like a rock.

The other approach assumes that while the effect of fundamentals cannot be accurately predicted, the psychological behavior of those in the market can be predicted. This approach leads to the arcane world of TA.

In both approaches, we have enough success to make us feel a solution is possible, and enough failure to let us know we really are just beginning to understand. In some ways we are like astronomers before Newton. The order in the stars convinced us that it was possible to predict, but without sufficient mathematics, we could just approximate. So what did we do then? We built models; incredibly complicated mechanical models that could be run and compared to the stars for validation. And when they didn't work, we evolved the models until we had the basis for a working theory.

I hope you will read this paper. The authors, like the model builders of old, have constructed a model that emulates the behavior of the market. It has a great deal of face validity. Their conclusions about the effect of fundamentals and traders is relevant to our ongoing discussions here. I hope you enjoy it.

[Deleted]

Mar 27, 2013 17:28:05 GMT -8 bud777 said:

I have posted this paper before, but i don't think many read it.

www.systemdynamics.org/conferences/2007/proceed/papers/WEITE454.pdf

As we try to understand the stock price behavior, there are generally two fundamentally different approaches. Both have limitations. The first is based on the same reductionist principles that serve us so well in other sciences. Understand the pieces, understand how they interact, and then you can predict how the system will work. This requires a theory about how the pieces interact, and validating the theory requires either the ability to conduct experiments or sufficient non-experimental data to conduct significant statistical analysis. In the stock market, we don't really have either. The closest thing we have to theory is that people will evaluate the fundamentals according to an agreed upon standards like DCF, and then will react in a rational manner. This ignores the unquantifiable effects of fear and greed and momentum. Thus we see phenomena like Apple beating projections and falling like a rock.

The other approach assumes that while the effect of fundamentals cannot be accurately predicted, the psychological behavior of those in the market can be predicted. This approach leads to the arcane world of TA.

In both approaches, we have enough success to make us feel a solution is possible, and enough failure to let us know we really are just beginning to understand. In some ways we are like astronomers before Newton. The order in the stars convinced us that it was possible to predict, but without sufficient mathematics, we could just approximate. So what did we do then? We built models; incredibly complicated mechanical models that could be run and compared to the stars for validation. And when they didn't work, we evolved the models until we had the basis for a working theory.

I hope you will read this paper. The authors, like the model builders of old, have constructed a model that emulates the behavior of the market. It has a great deal of face validity. Their conclusions about the effect of fundamentals and traders is relevant to our ongoing discussions here. I hope you enjoy it.

Thanks for this! Another great read if you haven't is "A Random Walk Down Wall Street." It's a classic.

[Red Shirted Ensign]

Mar 27, 2013 11:39:38 GMT -8 rickag said:

Mar 27, 2013 11:21:52 GMT -8 Red Shirted Ensign said:

While we wait for rationality in share price, sell covered calls at a strike near the top of the near term channel. For now it pays off and keeps longs from going nuts. It's only missed one week out of the past eight or nine.

Meh..

Could you explain a little further for me, I am a little dense.

Sell covered calls how far out, a week a month? When you say miss you mean the shares were called away?

I don't let them get called away. I buy back the contract if that were the case...which, kind of sadly, hasn't happened recently.
Right now I have sold March 29 460s, April 6 470s and April 19 470s. As the contracts expire without my having to buy back, rinse and repeat at a strike that is at resistance or just above.

Sadly ( or not), this keeps allowing me to keep the income....which is certainly better than nothing. One day Apple will break out and I'll have to be nimble and close out quick as the rocket climbs.....but I haven't had that problem for 10 of the past twelve weeks..

[macziggy]

Mar 27, 2013 14:23:58 GMT -8 Mav said:

Yes this is technicals, but since it's iPad's fault for bringin' it here ;D -

iPad didn't mention (because it's already common knowledge to savvy traders in that league, I guess) that there is HUGE confluenza at the SMA-20 give or take a couple bucks. If the SMA-20 goes, the 61.8% retrace of the 419-469.95 countertrend move is also in danger of breaking (438.5-ish).

As I understand it, the failure of the Fib 61.8% retrace level isn't "doom", but it IS at least generally regarded as a level that can be bounced off and still be considered a "bump in the road" healthy retrace in an uptrend. Below that and doubts increase. The problem is, the countertrend line in the sand should ALSO be around that Fib zone. If it isn't now it will be soon. "Worse", after a few days the countertrend line will be above 440.

So, I dare to "challenge" iPad in the sense that this particular SMA-20 may well be more important for this particular moment in time than it might be otherwise. Call it a clarification, even.

Btw, this is just my take. DYODD, YMMV, may cause chronic flatulence, etc. And since even _I_ can't trade based on my market takes, you sure as heck shouldn't! ;D

What I noticed today is that, if AAPL descends to the 20-SMA (440ish), and kicks back up from there, it may set-up a really nice Inverted Head & Shoulders on the daily chart (as it did way back in 2009). From there, who knows? H & S formations work out only about 50% of the time, but, it is something to consider. The projected target from there, above 500 toward 520. All IMHO of course.

[Deleted]

Here's something to chew on: Samsung is being rumored to sell 70M smartphones in the March quarter. That's up from 63M phones sold in the December quarter. Apple sold 47M iPhones in the December quarter, or 75% of Sammy's total for the same period.

If Apple maintains 75% of Sammy's predicted 70M phones sold in the March quarter, that's 52M iPhones. I'm at 37M iPhones. But we can dream...

Anyone see similar estimations or data that contradicts this extrapolation?

[Mav]

IDC estimated Samsung's smartphone sales at 42.2M in calendar Q1 2012.

techland.time.com/2012/05/02/samsung-wins-the-world-in-smartphone-sales-still-trails-apple-in-u-s/

Getting to 70M requires the smartphone market to be growing at a pretty decent clip...as in moreso than recently...

[Deleted]

Mar 27, 2013 19:18:56 GMT -8 Mav said:

IDC estimated Samsung's smartphone sales at 42.2M in calendar Q1 2012.

techland.time.com/2012/05/02/samsung-wins-the-world-in-smartphone-sales-still-trails-apple-in-u-s/

Getting to 70M requires the smartphone market to be growing at a pretty decent clip...as in moreso than recently...

I've seen 44.5M Sammy phones Q1 2012. But I'm obviously far more intrigued by the 70M number this quarter. The BOGOF factor may play into it, but Sammy also froze sales by announcing the S4 so early.

But let's say Sammy sold 60M instead: That's still 45M iPhones if the market grew and Apple retained its market share relative to Sammy

[Mav]

I'd go with your 37M number, really.

And I really hope that's not the number we get. Even in sellthrough terms, that's growth of around 15%. Which is pretty not great, unless you compare apples to oranges as Apple itself did until more recently. Then imagine the headlines of iPhones growing a shade over 5% YOY...

[Deleted]

Mar 27, 2013 19:36:25 GMT -8 Mav said:

I'd go with your 37M number, really.

And I really hope that's not the number we get. Even in sellthrough terms, that's growth of around 15%. Which is pretty not great, unless you compare apples to oranges as Apple itself did until more recently. Then imagine the headlines of iPhones growing a shade over 5% YOY...

It's probably too early to know if Sammy reports before Apple, but yeah, although I want more than 37M, Apple doesn't need it to produce a very solid FQ2 EPS #.

The market has already priced in the tough YOY compare (and then some). But I'm sure the talking heads will talk it down more, unless Apple has a solid beat over consensus estimates. And there's always that chance for a bigger surprise.

[Mav]

We should bring this to the fiscal Q2 thread.

But in the meantime, who knows what the Street will call a "solid" EPS number? If you believe Oppenheimer, the EPS will be in the $9.25-$10.25 neighborhood IIRC. Consensus is supposedly low $10s per Yahoo! Finance.

Me, I'm still not sure what to think, particularly if Oppenheimer's new guidance actually IS kinda new (as in, if Oppenheimer gives an upper range, that's kind of the best you can hope for).

I _was_ thinking $11 EPS early on. I'll have to run the numbers again to make sure I'm not being overly "bullish" with a 39.5% GM estimate.

The tremendous unknown is the reaction to the earnings compare. EPS was "distorted" last year by a sky-high 47% GM resulting in $12.30 EPS. I can't see any way Apple can "avoid" an EPS decline, and I sarcastically look forward to seeing the media make hay out of Apple's first YOY earnings drop in years. What a difference 700+ basis points in GM makes (anticipated YOY delta).

[macoz]

Mar 27, 2013 16:30:39 GMT -8 sponge said:

First of all Apple guided for 52 Billion and gave us 54 billion. They could have beaten that number by more if they had enough iPhone 5, iPhone 4, iPad Mini, and iMac in stock for the whole quarter.

They guided 41-43 billion. The range gives them wiggle room incase they have other issues in manufacturing. I expect them to beat both numbers very comfortably.

A guidance of 41-43 billion implies average daily sales of between 440 to 449 million. As we are almost at quarter end and this is the Easter weekend AND there is almost 2 billion in Deferred revenue that will be recognised this quarter I find it hard to believe Apple cannot make its numbers. In any case if sales are so bad they should make a warning announcement pretty soon ie within 10 or so days after the Quarter ends.