Striking At the Core of Apple

As we head into earnings for Apple, Inc., investors, short sellers, and traders await anxiously for the report on tuesday afternoon. Of interest, since the run up of Apple from the 430 level to 644 level in a short period of time, a number of catalysts has pushed the stock to an area that requires further due diligence. What is most interesting is that the sell down of Apple by 10% or so represents the worst sell off of Apple in its history. The question that remains and will be answered on Tuesday is the sell off due to worries about different suppliers' issues having a materially effect on Apple OR is it due by by slick algo traders (HFT) who know (somehow in advance) that the selling down of Apple in the fashion that we have just seen (a yo-yo sell down - up - down) is to ensure that weak hands (i.e. retail and other funds who can not stand this volatility)let go of their shares, so that the big boys (insiders) can enter in at a better price. There is almost a perverse sense of joy by different commentators on a well known media station that talk non-stop in almost every segment about Apple seeing its decline. Gone were the comparisons only a few weeks ago that on a ten year chart, the move up by Apple hardly looks parabolic but of course on 1 quarter chart, it looks extremely parabolic. Gone are the days that the PE is below the PE of the SPX, and instead in its place, that all great stocks/companies must take a breather. Oddly, the focus on Apple is beyond anything I have ever seen. It is as if none of the many other amazing companies exist or are worthy to talk about. The fixation on this stock is an addiction by this media company. I did a study today on how many times that this media station talked about Apple and it was over 100 times for the day. Well, here are my thoughts. My study shows that when a stock appears that it will beat significantly earnings, the large players who have the capital to both knock it down and buy it back at a cheaper price will do so and in hopes of getting an even cheaper price by scaring off other investors who perhaps got in around 430 and don't want to get out at 470 or 500 or 550 so they will sell and the stock will move lower to about that range. The truth is that Tim Cook nor Apple will disappoint. The numbers of 41 billion in revenues and 11.99 earning per share will be handily beat. Cook will also not lower guidance and look to China as proof positive that this stock is on an upward trajectory. The stock will drop immediately after the numbers are announced but then climb back to above 600 plus by Wednesday and open about 50 or 60 points higher. If Apple disappoints, you can expect the entire market to fall as well too. Now, what is even more exasperating is dealing with all the noise leading up to the trade. You have people that are exhausted from this yo-yo trading and that is topic of another blog entry. As the Wall Street Outsider, I am not privy to dark pools, or secret pal handshakes, or any kind of special programming that others spend millions on to ensure that they can either move the trade in their direction, I call it as I see it, feel it, and know it to be true. Trust your instinct. - The Wall Street Outsider