AAPL is currently in its best bull run ever. If you ever read the chatrooms during the day you'll be inundated with people telling you it's going to all time highs, to the moon.. that it'll go up forever. Let's not forget the same story that has held true for EVERY single company that has become > 5% weight of the S&P: the law of large numbers catches up and the company cannot meet long-term growth metrics that drive the current DCF valuations. The only difference between apple today and IBM, GE, Exon, et al, is that there is more money in the markets (from QE, from retail) and more manipulation and volatility (from hedge funds & algos) that drive wild price swings.
AAPL is currently trading at ~28 P/E. For a high growth company, this is reasonable. But what does Apple currently have that will drive such growth for a 2.75T company? More iPhones? Services? A car? Ads?
Apple shot up today on news that it told suppliers to produce the same number of phones as last year. Perhaps their market is not impacted by inflation as much as the Android market, I buy that, but inflation will catch up at some point to the lower end of their consumers and it will eat away at demand at some point. Core inflation is still hovering just under 6% and even a meaningful reduction this year will keep inflation at a high value (4.5-5% by EOY, best case scenario - assuming this last reading was not an anomaly and it shoots back up next time) and we're hearing from retail - Walmart, Target - that this is stripping demand. This will bleed into Apple at some point which could make their lofty ambitions of producing the same number of devices next year become a major write off. Yes, their management is better than Snap's but they can still make mistakes. Humans want to see the best possible outcome and I believe the Apple execs are likely not taking into account the full downside risks in their forecasting models. It will only take one announcement by management that they will miss on revenue or one earnings for them to come in under at which point the largest single-day market cap loss by Meta will pail in comparison.
Let's look at the bull and bear factors for AAPL:
Bull:
Bear:
I like simple charts with macro support. I know everyone is yelling about ATH and to the moon etc and I do think there is more upside this year, but the market is currently over extended and Apple is the biggest reason.
I'm looking for AAPL to go short to gap fill at $156 in the next 7-10 trading days.
AAPL is currently trading at ~28 P/E. For a high growth company, this is reasonable. But what does Apple currently have that will drive such growth for a 2.75T company? More iPhones? Services? A car? Ads?
Apple shot up today on news that it told suppliers to produce the same number of phones as last year. Perhaps their market is not impacted by inflation as much as the Android market, I buy that, but inflation will catch up at some point to the lower end of their consumers and it will eat away at demand at some point. Core inflation is still hovering just under 6% and even a meaningful reduction this year will keep inflation at a high value (4.5-5% by EOY, best case scenario - assuming this last reading was not an anomaly and it shoots back up next time) and we're hearing from retail - Walmart, Target - that this is stripping demand. This will bleed into Apple at some point which could make their lofty ambitions of producing the same number of devices next year become a major write off. Yes, their management is better than Snap's but they can still make mistakes. Humans want to see the best possible outcome and I believe the Apple execs are likely not taking into account the full downside risks in their forecasting models. It will only take one announcement by management that they will miss on revenue or one earnings for them to come in under at which point the largest single-day market cap loss by Meta will pail in comparison.
Let's look at the bull and bear factors for AAPL:
Bull:
- Sustained demand in an industry (smartphones) that has already seen a downturn
- Diversification into different cash streams (even though the iPhone is still the cow that milks the calves)
- Opportunity for walled-garden ads (this, IMHO, is the biggest opportunity for aapl and the only thing that helps it justify it's current price, but should we wait 5 years for it to become meaningful with no movement to the stock price?)
Bear:
- In-store sales remained flat for the first time... ever
- The fed will continue to raise rates and reduce QE
- P/E ratio is at 28 - a historically high (albeit not recently high) value for any tech company, let alone one that is worth 2.75T
- The market is not factoring in the long-tail impact that inflation has on consumers, inflation slowly eats away at demand from the bottom up and Apple hasn't seen it yet because the lowest economic classes (the only ones really impacted now can't afford their phones anyway).
I like simple charts with macro support. I know everyone is yelling about ATH and to the moon etc and I do think there is more upside this year, but the market is currently over extended and Apple is the biggest reason.
- Apple has been on a stupid technical trend straight up the past 2 months and is approaching a MAJOR resistance.
- AAPL is right at the 78 fib from it's ATH
- It's overbought, stochastics and RSI have been wavering and showing weakness for about two weeks
- Volume has been steadily decreasing, showing a lack of additional buyers
- Bears have not attempted a reversal yet, all downward moves have been due to bulls selling off on short-term news. When bears pounce they will come in hoards and smart bulls will take profits soon
- There are 2 major gaps created in the past 2 weeks on weak news (1: gap on earnings - iPhone sales weren't terrible, other businesses missed & 2: CPI - overall inflation down, which we know, but core CPI is stable)
I'm looking for AAPL to go short to gap fill at $156 in the next 7-10 trading days.