AAPL - potential trading dynamic

Frankly, AAPL is holding up more than I thought. I figured AAPL would produce a 4-5% decline if it simply met analyst expectations. The stock is still pretty cheap, and its total cash balance grew nicely.

The one short-term concern I do have is recalibration of expectations for the fiscal Q4. Apple gave us guidance of $7.65 eps. Apple beats its own guidance by a range of 9% to 38%. Which means it can produce EPS between 8.34 to 10.55.  With the street's estimates near 10.22 for fiscal Q4 (33% above the company's estimates, the street estimates have to come down. Usually AAPL beats by around 20%, but given that the company will still be in a product transition in fiscal Q4, prudent estimates would suggest a 9-20% beat (closer to the 9%, unless component prices for the older models collapse during the quarter).

With Apple's current size, its trailing multiple range has been 12.5 to 16. After the analyst expectation miss, a trailing multiple of 16 is thrown out the window.  Pending market sentiment, AAPL may very well touch a trailing multiple around 12.5-13.  This would equate to stock price between 535-555.

The chart corroborates the levels.

AH indicates tomorrow AAPL will test the 570 support. Market negativity should facilitate a break down from this support. I will begin adding near 550, and pending oversold conditions, go pretty heavy between 530-550.

Side note: QCOM looks to be taking a hit from this Apple's report. This is misguided. There is a lot of pent up demand for the New iPhone, and manufacturing will begin sometime this quarter. Benefiting QCOM.