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Friday, March 21, 2014

$aapl - marking time

The Pros:

1. Since the Q1 report, there have been higher lows on pullbacks.

2. Sine the end of Feb, the stock has been tightly trading around the SMAs and trend lines.

3. Not overbought (but not oversold either)

The Cons:

1. The stock is seeing resistance from the negative trend lines.

2. Media chatter expectations is to usher in the era of wearables, like they did with the iPod, iPhone and iPad. (Although the stock is still excessively discounted to industry peers despite it consumer brand strength and being a leader in mobile.)

Fundamentally, there is plenty more to write, ie Revenue growth has slowed, so it may justify a low multiple. Although margins have stabilized and increasing, which would justify higher multiple. Management no shy to buyback BILLIONS, near the $500 mark. etc. etc. etc. 

Potential plays:

1. The stock will move toward 540 into a product event announcement.

2. A catalyst (downgrade or negative article) can push the stock to breach the 38sma, and can test 518. (This should correspond with a pretty oversold position that would merit a long entry.)

3. A pig flies, positive sentiment takes the stock, maybe from the realization of the above out-of-wack discount, and AAPL breaks the negative trend simply to meet the valuation of metrics of MSFT.

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