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Sunday, November 4, 2012


fyi - still dealing with limited Internet and loss of power.

A lot of consolidation over the past month. About 18% in a month and a half, while the iPhone 5 has strong sales and the iPad mini looks promising. The decline has allowed for multiple compression, despite very healthy revenue growth.

Any argument that justifies high multiple stocks simply does not apply for AAPL because of its size. Regardless of enviable organic growth.

Trader chatter gave credence to the daily 200day sma. IMO, that sma was weak for AAPL. The 90 day mattered more. Once that broke, the higher probability was to test the 38sma on the weekly chart. But if sentiment got more negative, trader sentiment is likely to take AAPL to the 50 weekly sma.

My recent thesis on AAPL is predicated on the multiple the market will allow it to have. With Friday's decline, the multiple has reached 12s. 12.9!! The market has not declined nearly as much to merit the low multiple. (That Sentiment shared for QCOM as well.)

IMO, next week we get a flush out as AAPL tests the area near the weekly 50 sma. Will be accumulating near between the 560-570 area.

Current estimates have come down quiet a bit. Apple estimates are near 11.75, where as the street has them at 13.30. Apple usually beats the x-max quarter by 20-30% (not factoring in last years 38% beat because margin expansion will not be so awesome this year). Can't blame the street for coming down either. Apple has missed their estimates 2 quarters in a row, although Apple usually misses the fall quarter. 

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