Do we really need to say it? Today Apple (NASDAQ:AAPL) releases earnings, and with the stock nearly 80% off its 52-week highs, everyone’s got an opinion. From those who hate the hoopla to those who see the stock’s decline as the bargain of a lifetime, we’ve rounded up our 24/7 Trader contributors and advisors to give you their take.
Apple Needs to Pull an iRabbit Out of its Hat Today
Jon Markman, Trader’s Advantage and CounterPoint Options
I sense that despite Apple’s recent shellacking, it is still over-loved. It made its reputation selling unique, high-margin products into an undersupplied market. Now it is selling an increasingly commoditized product into an oversupplied market.
Its managers, who are just starting to be vilified after many years of being lionized, had better be able to pull an iRabbit out of their hats. Otherwise, I am afraid that the stock will continue on its path to being the next Dell (NASDAQ:DELL) or Hewlett Packard (NYSE:HPQ) — once-iconic companies that fell victim to their own success.
The stock is cheap, especially when you consider its vast cash hoard, but cheapness alone is not a catalyst. The stock is still owned mostly by growth investors who are going to give the company one more chance to show that it can muster more than single-digit revenue growth. If not, the stock will have to sink some more to be picked up and harbored by value investors.
The important lesson from all this is that what happened to Apple can happen to any stock, no matter how seemingly bulletproof its growth or products or fame. Stock values are all about fads, and when the fad adds an “e” and fades, there is no story bulls can tell that can will halt the selling until the last true believer dumps his shares.
Part of a Diversified Portfolio, or a Mini Options Pick
John Jagerson and Wade Hansen, Slingshot Trader
AAPL has popped up on the radar of a number of market technicians this month following inverted hammer and hammer patterns on April 2 and 5 respectively. On their own, these are weak signals but they coincide with an emerging bullish divergence on a number of technical indicators – most notably the MACD is showing increased bullish momentum. Could the technicals be revealing some nascent buying pressure in front of earnings?
The massive head and shoulders of 2012 has run out of steam and the stock is trading at an extreme discount from a valuation perspective. With the potential of further improvements in fundamental performance and a high probability of a shift in dividend policy, we think there is some potential here for investors looking to add AAPL to a well-diversified portfolio. Traders interested in a little extra leverage before the earnings report may want to look at the new “mini” options (1/10th the original size) as a cost effective way to profit from a likely surprise to the upside.
And the Numbers Say…Bearish
Ken Trester, Editor of Maximum Options
Apple has confirmed its bearish trend by breaking down from an attempt to rally up. The Power Stocks program I use to evaluate stocks is completely quantitative, so in my book, a pattern like this is one of the most reliable signals on which to take action. I recommend selling the stock if you own it, or opening some put options.
Two Support Levels to the Downside
Serge Berger, Head Trader & Strategist, The Steady Trader
Apple has recently retraced around 50% of its entire 2009 – 2012 rally. The area around $390 (give or take 10 points) is thus good support and below there, the next support sits closer to $320.
For those that were following along with me on the Apple short position in The Steady Trader, you know I just closed a short position for 6.02% profits in the model portfolio.
Stay Away From This Stock Dominator
Jim Woods, Editor-at-Large of the Wealth Shield
Apple is a company I consider to be a “stock dominator,” meaning they own a niche in the personal technology space that’s unique. Of course, investors haven’t been treating AAPL like it’s a dominant company of late, hence the massive sell-off. While I like Apple products, the stock is another story. Whatever happens today with earnings, it’s only the price action of AAPL shares that actually matters. If the stock can get back some of its mojo, then investors should look at it again. Until then, stay away.
A Bellwether of Bad News Ahead?
John Lansing, Editor of Parabolic Options, Trending123 and Power Trading at the Open
I’ve been in the bear camp on Apple (AAPL) for a while, and the stock is still a disaster. Tech in general is awful. I was initially hopeful that tech stocks that recently reported like Google (NASDAQ:GOOG), Priceline (NASDAQ:PCLN) and IBM (NYSE:IBM) would finally see their options get a boost in premium, but after reporting, they crashed and burned, so it appears staying on the short side of tech is the best strategy. This could be just the tip of the iceberg when it comes to how the overall market will act in the coming weeks and months ahead.
Go Long—Sort Of
Michael Shulman, Editor of Options Income Blueprint
Obviously, the masses are bearish on Apple. But I’m not—at least not for the long term. The stock is currently trading at its lowest multiple of earnings ever and it’s one of the few computing stocks that has seen growth in the past year. Earnings results can be unpredictable, though, so I’ve recommended taking advantage of all this bearish sentiment by playing options “on the house”—that is, by selling puts to short-term traders.
Agree? Disagree? We want to hear your side too, so let us know what you’re thinking about Apple today.