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Thursday, January 18, 2007

Apples Turning Sour?

AAPL earnings came out after the bell and its a wild ride for those who monitored after hours. Section in blue on the right is the after market trading. As you can see, right after announcement, AAPL stormed up to about $99.5 (near R3 of daily pivot) before reversing course and closing at $94.17 (near S3 of daily pivot). The sell off occured during the conference call and I think it is probably due to this:
"Asked if there is room for gross margin improvement: Co notes thrilled with op margin for the quarter; notes exceptionally high driven by gross margins; says was influenced by the record revenue; 'do not get used to 18% operating margins'; says looking at 12% op margins for MarQ; says realize they are in a favorable cycle but would never forecast that number long term.. How much of gross margin sustainable: Guiding to 29.5% for MarQ; tgt gross margins in the 27-28% range; notes favorable commodity environment helped this quarter; expects different commodity environment and product mix to further push down margins; says product mix and favorable commodity environment were big drivers for margins this quarter.." - from briefing.com
IMO, AAPL has more downside risk than upside, given its strong move up at the MacWorld event and all things positive is probably already factored into the soaring stock price. If you look back at the past 2 years, when AAPL continued its rise after Macworld, there is sell-off after earnings. But when there is sell-off after Macworld, stock price spike after earnings. Of course just looking at 2 years is not indicative of any solid patterns, but I note this interesting occurence. Next support for AAPL @ $93

-Quick way of estimating range for an earnings move.

-OIH technicals: positive divergence.

-Read Eric Bolling's diaries: Life in the Pits. He's the handsome energy guy appearing on CNBC every now and then talking about oil and energy

-Some charts of interest by highchartpatterns

-Using MACD (via Caltrader)

-Option Jungle starting a series of option education program. For those who don't know about options but want to start learning, check it out here.


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