$aapl to have a great Q1

- 9 million iPhones sold this weekend. 

- margins boost from production and material costs. 

- the buyback already reflecting a 7% beat on expected eps. (The above points may accelerate the beat, assuming estimates don't change.)

Estimates are going to be rising. AAPL belongs in the mid-500s. 

Market Thought... Fed's helping hand

I was one of the many who got surprised on Wednesday. Not so much for the lack of withdrawing QE, but more for the lack of acknowledging the improvements the data is showing. 

The employment numbers have been choppy, with respect to estimates, but have been growing at a healthy clip. Jobless Claims have been really good.

The unemployment rate is at 7.3%. Year-over-year, that is a pretty nice decline. In fact, if looking at the rate of decline, an optimistic estimate would suggest a 6.5% unemployment in about 4 months. 

Throwing in a few wild card economic shocks, could push the estimates further out. The thing is, the economy is not dishing out these negative wild cards. In fact, the more data comes in the better the economy looks. To name a few:

1. Existing home sales at 6 yr highs.

2. Jobless claims are already a pre-recession levels.

3. Philly Fed outlook spiked 22%!

The Fed said they are letting the data guide them, and their key data point is the unemployment number. But their lack of adjustment-in-preparing for withdrawals suggest they are ignoring their target. 

If the fed gives the markets 4-6 months of 'easy', then the market trading dynamic should be to keep trading at a premium multiple. The market (sp500) should maintain a Trailing PE near 17.

Assuming, recent estimates hold, the SP500 should be near 1720 by the end of the year.

The SP500 is already above the 1730. As such, I'm cautious.

A short term trade is setting up so that the market eases from its really over bought condition. Longer-term, who knows what the era of tightening will do, but there is structure the technicians can work with.

Is the Fed on crack?

They must be looking at some other US economic data. Or throwing the international community some time to get their houses in order. 

- Jobless claims are trending down. Way down. Lower than 2007.

- Employment rate is down. Not to their target, but lower with the trend in the Fed's favor. (Unless the Fed governors are looking at the number of applicants who withdrew from searching for a job to sway their opinion.)

The employment trend simply don't justify 2015 tightening.  If the job trends continues, we will be at 6.5% in about 6 months. 

Surprised by the dovish tone. 

$aapl - misdirection and secrecy

While all the leaks focused in superficial aspects of the iPhone 5c and 5s, the most critical innovative features were very much kept quiet. 

1. iOS 7 was very much kept quiet.

2. A7, 64bits, and M7 were very much kept quiet. (The capability of the A7, M7, iBeacon and Touch ID have mid-to-long term consequences that few mainstream press is chatting about.)

Management is still firmly in control of the secrets they need to keep.

$msft being attacked, hard

1. Tablets - accelerating the decline of the PC (aka WinTel era), jeopardizing Windows profits. 

2. iWork is now free for new iOS device purchases. iWork can now be accessed through mobile and PC (via web browser). With iOS gaining device share, and more importantly enterprise acceptance, this jeopardizes Office profits. 

3. IBM announcing another $1billion backing of Linux servers. IBM's efforts were effective in 2000, and should continue to be. Jeopardizing Windows server business. 

(Curious to the effect of the gaming console business with the 64bit push in mobile. Still too early to list as a threat just yet.)

Three large profit centers of Microsoft are being attacked pretty hard, at the same time. 

$aapl stochastic

Apple is getting oversold. Its about to get oversold enough for a bounce.

Short-story, the current pattern is to buy AAPL when the weekly Slow Stochastic is near or slightly below 20.

The long-story, last year's massive decline obviously created a new trading pattern. The wash out was witness via the monthly chart approaching very over-sold conditions via the Slow Stoch.

Upon achieving this oversold condition, the stock fundamentally changed.

1. The massive buyback was announced and being executed.

2. The street was re-conditioned via their expectations (to tone down the out-of-whack numbers).

3. It became acceptable to buy AAPL again. Numerous big name players entered the game.

4. Last quarter's report suggested Apple management is in control of the street's expectations again.

There is always the possibility that the stock breaks down, and re-enters the low 400 trading range. However, due to the above, that scenario seems unlikely. We already know management is not hesitating purchasing the stock below 420. And we also know big-boy investors are also not hesitating to purchase in the low 400s. (There is also a new found realization that Microsoft not being a secure of an investment as some big-funds would hope. There is a lot of concern via the lack of mobile penetration, still loosing money from online services and most importantly the attack on Windows and Office.  These funds are going to have to migrate these funds or get caught in a declining revenue/earnings story. These funds will have to go somewhere.)

Near-term catalysts remain:

1. China Mobile deal. (The iphone is now technically capable and approved. We just need confirmation.)

2. Actively improving its online services. As the 'services-perception' changes to a positive one, the stock should also reflect the sentiment.)

3. Good-old financial out performance. Continue to under-promise, over-deliver. (Combined with the reduction of shares, from the buyback, the stock can accelerated to the upside.)

Also, many analysts are ignoring the affects on margins w/the current iPhone strategy. New, more inexpensive process for the 5C and already established process for the 5S. In Apple's 1st quarter, margins may very well approach 40% again. Handedly beating the street's expectations.

Near-term negative catalysts:

1. Ignorant media looking for page views. Negative chatter will bring down the stocks.

2. Initial sales do not meet expectations

$tsla hasn't been oversold in 8 months

Thought that was an interesting stat. 

It's had it's dips, but that a true oversold condition.