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Thursday, July 7, 2011

some thoughts... GOOG, AAPL and IBM

Been doing a lot of thinking regarding these names with respect to their current moves and technical set ups, and how to play them going forward.

GOOG - My earlier post, itching, still stands. I much prefer to enter near 525 with a consolidation, but here is where the 'thinking' comes to play.  With today's close, the lower probability scenario looks to be playing out for Google.

With a stable market, and a functioning society, Google is still relatively cheap (ex-cash), but what makes this interesting is Google+. The social feature is Google's unknown variable, that will allow Google to participate in the next phase of the web, and allow GOOG to maintain an elevated multiple. (Something Microsoft was unable to do in the first stage of the web.)

Basically, I am looking to make an initial enter on any consolidation from this move (my upper target of 580 remains for now).  Here is my thinking: if Google's expenses this quarter are in check, they will most likely beat estimates and the big-boys should appreciate its revenue growth.  If the big-boys decide to punish the stock, for whatever reason, I think the punishment will be short lived because the headway in social, with Google+, will overshadow short-term negatives.  Two scenarios that suggest GOOG will be higher from here by the end of the year.

AAPL - With the obvious resistance approaching (560 level), the obvious perception is that it needs juice to breach it. (Basically, Apple is at it's lower-probability trade.)

Re-confirming the big-boy perception is the discussion on Fast Money, where all the traders agree.

I have been saying I was going to ease up above the 360 level for sometime now, and I will. But seeing the action with others near their resistance levels, the contrary play would be for AAPL to breach it.  A near term catalyst could be the anticipation of China Mobile getting the iPhone. (IMO, the growth opportunity will allow AAPL to have a trailing multiple of 19-20 again.)

IBM - Although I sold this, I am eagerly waiting to get back in with an initial entry.  Historically, IBM runs up just prior to earnings, then sells-off after they report.  But historical tendencies may not apply anymore.  IBM is seeing a shift in trading-dynamic with an increasing multiple.  IMO, the market is anticipating increased revenue growth. (The market already knows it will see nice earnings growth.) If IBM sees revenue growth it may rally after earnings, and continue its multiple expansion at a faster rate. If not, IBM will see its usual sell off, but continue its multiple expansion at a slower rate.

Looking for an initial entry again near 172 or at the 10 SMA.

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