AAPL: The Death of an Uptrend

Quote from cactiman:

AAPL's 45 month Uptrend of Higher Highs and Higher Lows ended today.
I didn't think this would happen, but it did - for whatever reasons.
:(
More...

Cactiman, all trends end and nobody knows when this will happen. I believe you had the right idea to buy the APPL dip, and the only mistake you made was one of a) not exiting quickly when the lower trend line of the time frame you seemed to be entering on was breached and then became resistance, or b) not patiently waiting for the "dip" to the lower trend line in the time frame you eventually used as your defining support level. Either method of with-trend swing trading of AAPL would've resulted in a small loss, a small profit (if you had bought in on the first visit to the low $500's), or no trade at all (if you decided the selloff was simply too rapid to take action at that point).

You may be absolutely right in your basic APPL thesis and the stock could exceed $1000 one day, but price tells us the story of major investor sentiment, just as the market sells off on good news when it's in a sour mood and runs up on bad news when it's in an exuberant mood.

I took a large loss on a trade a few years ago where fundamentally I definitely had the right idea, but traded off my bias instead of the technical price action in my anticipated trading time frame. I wasn't patient enough to wait for a sign that the technical price action was aligned with the fundamental outlook. Timing is everything and patience is one of the more difficult virtues to cultivate in trading.
 
Uhhhh, sorry, I don't accept you guys as being above me - either as snide critics or nice-person teachers.
We're all just small-time traders here, voicing our opinions and thoughts concerning different topics on various ET Threads.

I thought AAPL's Uptrend since March 2009 wouldn't be broken at this time, but it was.
I was wrong about that and said so. Big deal.

But I'm still bullish on AAPL.
I also believe I'll be showing a net profit for AAPL, after closing all my current trades between December and June.
Time will tell.
:)
 
Not following your logic...
If you think a stock is only worth book value plus future income stream,than AAPL was cheap at 700.

Even if you are conservative and use tangible book,or exclude book value altogether,AAPL was trading at a significant discount to FV.And that's after significantly haircutting the growth rate.

AAPL's 5 year FCF,Rev and EPS has been remarkable and obviously difficult to maintain.12 month FCF is apx half of the 5 year.If you want to be conservative and cut the 12 month FCF growth rate by 66% and use it as your growth rate,with a terminal growth rate of 4%,AAPL is now "fairly" valued.Keep in mind that I didn't add book value as you suggest.

I am not suggesting to buy AAPL here,though I am covering my deltas and staying short Apr and Jan/14 vega.I am also in the Jan/14 puts

450 +1
350 -3
250 +2

I may be dead wrong,but I believe AAPL's downside MAY be 450.IMHO,we are looking at the new MSFT.



Quote from Spectre2007:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=253318

this is what happened.


AAPL was the easiest to escalate in price, it had 'followership' with the public. The shares were distributed the last third of price cycle to the public. Those who were too slow to exit, were left holding the bag. Even money managers got burned.

What we call the stock market is a elaborate ponzi scheme, paper wealth created out of thin air. Look at the valuations of internet stocks, how it was justified during the boom.

Ultimately the stock is only worth book value, all assets minus liabilities and future income stream.
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Attachments

Quote from NoDoji:

If nothing else, there's a psychological tendency to buy into a split of a desired stock and to assume when a stock starts paying a dividend, their rapid growth phase is settling down.
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I think this inefficiency disappears after a few seconds, no?
 
Quote from taowave:

Not following your logic...
If you think a stock is only worth book value plus future income stream,than AAPL was cheap at 700.

Even if you are conservative and use tangible book,or exclude book value altogether,AAPL was trading at a significant discount to FV.And that's after significantly haircutting the growth rate.

AAPL's 5 year FCF,Rev and EPS has been remarkable and obviously difficult to maintain.12 month FCF is apx half of the 5 year.If you want to be conservative and cut the 12 month FCF growth rate by 66% and use it as your growth rate,with a terminal growth rate of 4%,AAPL is now "fairly" valued.Keep in mind that I didn't add book value as you suggest.

I am not suggesting to buy AAPL here,though I am covering my deltas and staying short Apr and Jan/14 vega.I am also in the Jan/14 puts

450 +1
350 -3
250 +2

I may be dead wrong,but I believe AAPL's downside MAY be 450.IMHO,we are looking at the new MSFT.
More...

You shouldnt add book value and earnings together when valuing a stock.

Either you use book value or you use earnings power (earnings * multiple) .

The reason is that assets are consumed (depreciation) while generating earnings.
 
I mostly agree with you , but there are some in the value camp who do incorporate tangible book value or derivatives of it.

Take two stocks in the same industry , same growth rates , similar price/ sales multiples
Same. Roa, but one stock has tons of cash , no debt.the other company has no cash and is highly levered with a much lower book.

There is a case to assign some value to a modified book.


QUOTE]Quote from newwurldmn:

You shouldnt add book value and earnings together when valuing a stock.

Either you use book value or you use earnings power (earnings * multiple) .

The reason is that assets are consumed (depreciation) while generating earnings. [/QUOTE]
 
from the thread "AAPL: Buying The Dips!"

12-16-12 08:25 AM
Quote from brokerboy:
i still hope you don't lose money but you been saying this for 200 points at what point do you change your mind? i would not be surprised to see near 400 sooner or later that is not a pretty chart. i still can't believe the s&p is up so much with apple down. i would of never had the balls to short apple straight up even with my negative view on it. i will only say this is a really hard market to trade.

Quote from cactiman:
Brokerboy,
I can't promote "Buying The Dips" anymore for AAPL because it's no longer in an Uptrend.
If anything, I'd say it's best to "Sell The Rallies" at this point.

Anyway, I started a new thread entitled "AAPL: The Death of an Uptrend" if you want to join in.
There are posters there taking the usual cheap shots at me, but that's to be expected in ET.

I don't care however, because I know I completed 27 AAPL trades this year and won on 24 of them - for a total Net Profit of $8179.00.
And that's better than a kick in the butt.

What the next 6 months will bring for AAPL is anybody's guess.
You think it could be a fall to 400, and I think it could be a 500-700 trading range.
But what does Mr. Market think?
It will be exciting to find out!
Stay tuned...
:)
 
Quote from NoDoji:
Cactiman, all trends end and nobody knows when this will happen. I believe you had the right idea to buy the APPL dip, and the only mistake you made was one of a) not exiting quickly when the lower trend line of the time frame you seemed to be entering on was breached and then became resistance, or b) not patiently waiting for the "dip" to the lower trend line in the time frame you eventually used as your defining support level. Either method of with-trend swing trading of AAPL would've resulted in a small loss, a small profit (if you had bought in on the first visit to the low $500's), or no trade at all (if you decided the selloff was simply too rapid to take action at that point).
You may be absolutely right in your basic APPL thesis and the stock could exceed $1000 one day, but price tells us the story of major investor sentiment, just as the market sells off on good news when it's in a sour mood and runs up on bad news when it's in an exuberant mood.
I took a large loss on a trade a few years ago where fundamentally I definitely had the right idea, but traded off my bias instead of the technical price action in my anticipated trading time frame. I wasn't patient enough to wait for a sign that the technical price action was aligned with the fundamental outlook. Timing is everything and patience is one of the more difficult virtues to cultivate in trading.
More...

NoDoji,
Firstly, I want to apologize to you for being a bit snippy and defensive yesterday.
You were making some polite constructive criticism, and I shouldn't have responded the way I did. Sorry.

The main difference I see in our approaches is you use Angled Trend Lines and I don't.
I find them a bit subjective (which 2 or 3 points should they touch to create the angle?, etc.), so I prefer to only use Horizontal Price Levels.

I made all my AAPL trading decisions based on the Higher Highs and Higher Lows in its Long Term Uptrend.
In hindsight it would have been better for me to get out back in the 600's, yes.
But at that time 600 seemed really low, and the Uptrend was still in place.

"Buying The Dips" had worked for the prior 44 months, so according to my rules I was correct to keep buying AAPL.
Did I overdo it, get impatient, and buy too much?
Uhhhhh.....you got me there!

But I'm not too worried about the next 6 months.
I'll probably lose on my January and February trades, but still feel confident about getting out of the April and June Trades with a net profit.
Though I may have to slither a bit to pull it off!
Good Trading.
:)
 
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