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Which Way Wednesday – AAPL’s Drag Too Much For Nasdaq to Overcome

What is wrong with AAPL?

After a great recovery off a dive to $505 in mid-November, they bumped up against the 200 dma at $596 and have been harshly rejected – already pulling back $30 (5%) to $566.  There has been no news – certainly no bad news – to cause this, just as there wasn't much news to cause the original drop (which we bought into).  As noted yesterday, AAPL is a big part of our $25,000 Portfolio and we even have an AAPL Money Portfolio and, although we are hedged – we're still expecting them to get back over $600 by Christmas.  

Without AAPL, the Nasdaq is toast, as it's roughly 20% of that index – hence our failure to get back over 3,000 on the Nasdaq but, when a stock has that much control over an index – perhaps the simple answer is that it's just being manipulated by Fund managers in order to manipulate the indices it's over-weight in.  That's why hedge fund managers like Paul Schatz of Heritage Capital can make outrageous calls like AAPL will be a $400-500 stock.  Why?  Well, he's a bit vague on that – it seems to have something to do with the Fiscal Cliff and the broad economy and not much to do with the fact that they make $50 a share and have $170Bn in cash on the books and that $400-500 would be a ridiculously low value.  

What does a guy like Shatz have to gain from pushing AAPL lower?  Well – if the Nasdaq follows AAPL down, then there's a whole index full of stocks that get dragged down with it and offer up attractive buying opportunities – for no other reason than one stock in the index caused a lot of damage.  That allows fund managers to allocate capital to the Nasdaq, knowing that eventually either the index will de-couple from AAPL or that AAPL will recover to a more normal value and bring the entire index with it.  

As you can see from the chart above, AMZN is humming along as is GRPN and GOOG, who are about to cross back over their own 50 dma at $704.  While certainly not in the same end of the tech business, it would be strange to see GOOG doing so well while AAPL is doing so poorly.  That's why we bought back some of our hedges on yesterday's weakness and are playing for the bounce off that $570 line.  Our actual buy point remains $555 but this is around where we should expect a turn as AAPL again gets too cheap to ignore.  

We're not likely to recover WITHOUT AAPL and, as I said in yesterday's post, there's not much likelihood of a catalyst from the data between now and next week (other than a real surprise from the Fed this afternoon) so it's all about patience.  AAPL is more likely to lead the Nasdaq this week as there's all sorts of potential good news out of them (sales numbers, market penetration, competitors faltering) that could make a sub-$570 price seem silly and a 5% recovery in AAPL, back to $595, is a 1% pop in the Nasdaq – back over 3,000 – and that would put all our Must Hold lines back in play while we wait for the Dow to catch up (13,600 is bullish goal).  

As you can see from the chart on the left – as goes AAPL, so goes the nation with over 500,000 US jobs created or supported by AAPL and that's not even counting the entire smart-phone industry they helped create in the first place.  So AAPL better not be going down to $500 (again) as it's going to signal not just AAPL's failure but the failure of the US Economy in Q4 and we can just bend over and kiss our assets goodbye if that happens. 

Meanwhile, it's time to do a little bargain hunting – both with AAPL itself as well as the tech sector it's holding down.  We'll do a Holiday Shopping Survey this weekend but preliminary reports already suggest the malls are humming and, once we get this cliff nonsense behind us – I think the consumers are ready to rock and roll this holiday season.  


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  1. stjeanluc

    Oil lines:

    R3 – 91.12
    R2 – 90.15
    R1 – 89.51
    PP – 88.54
    S1 – 87.9
    S2 – 86.93
    S3 – 86.29

    Yesterday's high and low – 89.18 / 87.57
    Dail Fib lines – 90.18/89.61 and 87.19/86.95

  2. stjeanluc

    AAPL looks to open lower again – my next lines are at 566 and 555! 

  3. stjeanluc

    Income portfolio news:

    BA - Apparently some issues with the fuel lines in the 787 Dreamliners that require inspection (looks like a lower open)
    CLF - Downgraded to Market Perform by RBC Capital (but will open higher it looks like)

  4. 1020

    Good Morning!

  5. Pharmboy

  6. Pharmboy

    CRM – pretty good article on their 'valuation'….cough cough.

  7. stjeanluc

    David Frum pushed a carbon tax:

    http://www.cnn.com/2012/12/03/opinion/frum-tax-energy/index.html

     

    A tax of $20 a ton, rising at a rate of 4% per year, would over the next decade raise $1.5 trillion, according to an important new study from the Massachusetts Institute of Technology. That $1.5 trillion is almost twice as much as would be recouped to the Treasury by allowing the expiration of all Bush-era tax cuts for upper-income taxpayers.

    The revenues from a carbon tax could be used to reduce the deficit while also extending new forms of payroll tax relief to middle-class families, thus supporting middle-class family incomes.

    Meanwhile, the shock of slowly but steadily rising prices for fuel and electricity would drive economic changes that would accelerate U.S. economic growth.

    Seems to make sense to me but I am sure we will hear many arguments against it!

  8. diamond

    Phil – What are your thoughts on FCX?
     
    "Freeport McMoRan craters 13.9% on news that it's acquiring Plains Exploration (+25%) and McMoran Exploration (+15.2%)."

  9. aaronc

    Morning all. I've been playing for AAPL 555 before the end of the year, then some of my short call covers come off.

  10. dclark41

    Phil:
    Doesn't make that much sense to hold on to those AAPL $590's callers at .61.

  11. stjeanluc

  12. scottmi

    AAPL/aaronc - how did you identify 555 as your target?

  13. ariveraA

    Apple:  The Apple aura of invincibility ended with Steve Jobs.  Note that the uniqueness of Apple products is disappearing, there is not much difference between an iPhone and a Samsung S III.  Also, they made the same mistake as decades before: a closed ecosystem is great until it kills you slowly.  It happened with McIntosh and it's happening again.
    Maybe it can become a dividend aristocrat! 

  14. stjeanluc

  15. jabobeast

    Phil or anyone—are there auctions this week to drop the mkt and raise tlt a little? Can't remember..

  16. harip

    Phil,
    What is your opinion about fcx at these levels?
    thanks

  17. stjeanluc

  18. stjeanluc

    A portfolio equity chart on this one would be challenging…

  19. williex

    Phil
     
    How does steadily rising fuel prices acceerate us growth if the masses have to spend more to fill their tank up?

  20. stjeanluc

    We are close to the max profits on the SODA spread. At least the 35/37.5 one!

  21. stjeanluc

    AAPL – I think that one of the biggest unspoken fear from many people is that margin will have to compress with more capable competition and also entering markets where subsidies on phones from telcos are not as generous. But markets will expand at the same time. AAPL will still make tons of money, maybe not as much relatively speaking. But sure is frustrating now.

  22. stjeanluc

    Auctions / Jabo – None left this week… 

  23. Phil

    Good morning!  

    Europe gave up a lot of ground off a nice open but Asia was great this morning with the Shanghai bouncing 3% and the Hang Seng up 2%.  The Euro fell from $1.312 back to $1.306 but seems to be holding there.  Pound held $1.608 and there's still 82 Yen to the Dollar and the Nikkei tested 9,500 again but was rejected there, as usual.  

    Shanghai soars 2.9%, with chatter about plans for speeding up the "urbanization" process coming out of a Poiltburo meeting as good an excuse as any for the big move. Industrial firms (CHII) lead, including Sany Heavy Industry +10% and Anhui Conch Cement +4.8%. Financials shares (CHIX) had a big move after Beijing eliminates a rule limiting investment in banks by insurers.

    We had the usual (for this week) pre-market pump but we should have the usual sellers taking advantage of it at the open.  It's not about what we do during the day so much as what we hold and, so far, those Must Hold lines are holding up. 

    Dollar 79.77 not having any effect and oil is $88.50 with inventories at 10:30 and gold still can't get back over $1,700 – now $1,696 as we wait for the next fiscal cliff rumor to give us some direction. 

    With Asia's good performance, we might have a bit of selling exhaustion over here – but not until we hear from the Fed most likely.  They are still using AAPL to hold back the markets so the big turn signal will be when they let it bounce back, but we may see that $555 line again first.  

    At the open: Dow +0.24% to 12984. S&P +0.04% to 1408. Nasdaq -0.14% to 2993.

    Treasurys: 30-year +0.08%. 10-yr +0.11%. 5-yr +0.06%.

    Commodities: Crude -0.09% to $88.42. Gold 0% to $1695.75.

    Currencies: Euro -0.16% vs. dollar. Yen +0.21%. Pound +0.04%.

    Market preview: Stock futures maintain their gains despite the ADP report missing expectations, with commentary that the number would have been higher had it not been for Superstorm Sandy perhaps keeping the mood positive. The S&P benchmark is +0.25%.Comments out of China that the new government will maintain easy policies is also supposedly helping. Freeport McMoRan craters 13.9% on news that it's acquiring Plains Exploration (+25%) and McMoran Exploration (+15.2%). Later: Factory Orders, ISM Non-Manufacturing Index

    Q3 Productivity and Costs: +2.9% vs. +2.8% expected, +1.9% prior. Unit labor costs -1.9% vs. -0.9% expected, -0.1% prior.

    More on Productivity and Costs: Output has been revised to 4.2 from prior 3.2. Hours remain unchanged at 1.3. Real hourly compensation at -1.4 from prior -0.4.

    Nov ADP Jobs Report: +118K vs. +125K consensus, 158K prior.

    More on ADP jobs: Now included with the reports are the insights of Mark Zandi, and he blames Sandy for "slicing" 86K from payrolls. By this calculation, November would have seen a gain of 204K vs. October's 157K. Economy fixed.

    The November Discover U.S. Spending Monitor Index slides 2.7 points to 95.4. Those saying the economy is improving held steady at 35% (up from 21% a year ago), while those saying personal finances are improving fell 2 points to 26% (up from 19% a year ago).

    Eurozone retail sales -1.2% M/M in October, the steepest drop since April, and considerably worse than consensus of -0.3%. September's figure cut to -0.6% from earlier estimate of -0.2%. (PR)

    October's decline in EU retail sales footed to 3.6% on a Y/Y basis, far worse than a -0.8% forecast, and the biggest annual fallsince May 2009. The euro, meanwhile, continues to cruise along at its highest level since the Spring, buying $1.3069. 

    Delivering the U.K. Treasury's Autumn Statement, Chancellor Osborne forecasts GDP growth of 1.2% in 2013 and 2% in 2014. A few months back, the forecasts were for 2% and 2.7%, respectively. He naturally blames the underperformance on the EU crisis.

    "If you want to buy my company, you have to close it by December 31," says KKR chief Henry Kravis, relaying to Goldman conference-goers what he's hearing from acquisition targets worried about higher taxes next year.

    Gold gets a downgrade at Goldman Sachs, the firm lowering its 2013 end-of-year price forecast to $1,800/oz., and 2014 to $1,750. "We see growing downside risks … the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in U.S. real rates on better U.S. economic growth."

    Shares of Green Mountain Coffee Roasters (GMCR +7.9%) edge higher in premarket trading, up 0.9%, as nothing alarming over competitive pressure has flowed out of the Starbucks Investor Conference (recaps: III) just yet. If anything, it appears Starbucks has its fingers in so many pies that the single-serve coffee market is only a minor focus.

    Heard at the Starbucks (SBUX) Investor Conference: 1) The global growth story isn't over, according to early comments from CEO Howard Schultz. Plans are in place to have over 20K retail stores on six different continents by 2014. 2) Starbucks in the U.S. isn't overly saturated just yet, with volume growth still setting records. Over 1.5K new U.S. stores are planned for the next five years. 3) In China, Starbucks is "cracking the code" with consumers by adopting to local tastes. 4) The Teavana purchase hasn't been directly addressed yet, but the planned inclusion of Teavana products at stores is a positive sign the deal is on track. (webcast)

    More from the Starbucks (SBUX) Investor Conference (previous early recap): 1) More Evolution Fresh products in stores and grocery outlets are on tap. 2) Why Teavana? Tea is a $40B category with double-digit growth, according to execs. The growth potential is to bring the Teavana brand out of the malls and into the massive Starbucks street presence. A test run of a Tazo retail store showed upside potential. 3) Starbucks will sell La Boulange food in grocery stores as it looks to benefit from the bakery purchase. 4) No further acquisition plans in place, as Schultz says the firm is "full up." SBUX+1.2% premarket. (webcast) 

    INTC seems to think they are too cheap:  Intel (INTCraised a healthy $6B in its debt offering – $3B of the notes mature in Dec. 2017 and yield 1.35%, $1.5B will mature in Dec. 2022 and yield 2.7%, and $1.5B mature in Dec. 2032 and yield 4%. Assuming Intel aggressively uses the funds for buybacks and continues to spend heavily on capex, the company could soon have a negative net cash position – RBC forecast as much yesterday, and that was the firm thinking Intel would only raise $2B-$3B. (previous: I,II)

  24. aaronc

    Scottmi/AAPL – I have been laser focused on AAPL since I was burned on the way down. It's quite obvious to me that AAPL is not trading on it's fundamentals or really even technicals, much like Phil indicated in his post today, I think it is being used to drag around the indices. I woke up to this at about 620 on the way down. AAPL just seems to congregate at these weird numbers, remember 666? It's like there is an unspoken rule that says go and manipulate the indices, we'll rally back here at 666. Now it's 555. When we reach a deal on the Cliff stuff though I think it will be a sight to behold.

  25. Phil

    Goal at $555 on AAPL so it is time to buy back the covers in the $25KP and the AAPL Money Portfolios and the April $570 calls can be rolled down to the $550s for $10 in the $25KP and that's a worthwhile pick-up.  If you don't have the cash for that, the April $570s are still $41 and the June $500/575 spread is $40 – so a good way to take and adjustment but, of course, you still want to be able to sell those short-term calls. 

  26. Phil

    BA/StJ – No effect from that news.  Good sign that BA is too cheap here ($74).  

    CRM/Pharm – I never get that company, maybe because I just don't like their software but value never makes sense to me. 

    Rather than play AAPL for a weekly move, you can play QQQ next week $64s for $1.50 as a play on AAPL holding $555.  

  27. chasw

    StJeanLuc.
    Carbon Tax, my read on it is the 2% maintain exemption and the 98% are left covering 98% of the $1.5T. Not a good deal without the increase on the 2%.

  28. stjeanluc

    Carbon / Chasw – It would have to be part of a bigger, fairer deal obviously. But interesting to see someone like Frum backing the idea.

  29. stjeanluc

    Good article on Buffett:

    http://www.newyorker.com/talk/financial/2012/12/10/121210ta_talk_surowiecki

    The investing world is dominated by a manic-depressive style, in which the average mutual fund turns over nearly its entire portfolio every year. Yet Buffett has prospered by ignoring all this. As an investor, he’s known for his patience—he says that he likes holding stocks “forever”—and he prefers a few big bets to an endless number of small ones. “If you go from flower to flower, you have to find a lot of flowers to make a lot of money,” he told me. “There aren’t that many great ideas out there.”

  30. stjeanluc

    AAPL taking a turn for the worse now… WTF!

    I hope we don't revisit the $529 and $509 line….

  31. Phil

    Carbon Tax/StJ – No argument from me. 

    FCX/Diamond – I like them long-term.  They are about 25% gold and $30 makes for a good entry point so I'd give them a chance to hit it but you can already sell 2015 $30 puts for $6.50 for a net $23.50 entry, so I'd keep an eye on that one as it gives you a 30% discount and is margin-efficient at net $3.65 (according to TOS) to make $6.50.  

    Callers/DC – Absolutely right on that.  

    FAS Money – Strangely enough, XLF holding up well.  Kind of makes me think the index move down may be BS. 

    Closed system/Arivera – What is closed about AAPL's system?  It's a phone – I'm not looking to re-program it.  There are 2 Billion Apps – I don't know of ANY that I can't get on an AAPL that I can get on a Galaxy.  That whole closed system argument is from the 1980s – what's the relevance now?  Didn't IPod's complete and total domination of the market kill that argument a decade ago?  

    $25KP – Living and dying with AAPL at the moment.  

    $25KPM – Not subject to the same volatility but locked into the boring QQQ trade to win back the money that was lost on AAPL

    AAPL Money – Also living and dying with AAPL.  Longer-term than the $25KPs though and I do love owning AAPL at net $600! 

    Auctions/Jabob – Next week are the auctions (lots of them).  

    FCX/Harip – See above.  

    Rising fuel/Willie – Who says it does accelerate growth?  

    Margins/StJ – Isn't this the IPhone 5?  What happened with the IPhone (June 2007) and the IPhone 3G (July 2008) and the IPhone 3GS (June 2009) or the IPhone 4 (June 2010) or the 4S (October 2011)?  People act like this is the first time AAPL has released a phone and speculating on things happening that have never happened before – there's no rationale to it.  They've been rolling out phones across the planet for 5 years now – what makes this time different?  

    I'd say, if anything, the big fear in AAPL and everything else is the poor EU Retail Sales figures this morning.  That's a big worry for anyone who sells consumer products.  

  32. 1020

    stjeanluc/AAPL  I have 536 as the next stop…..

  33. Phil

    Oil inventories down 2.5Mb but gasoline up 8.5Mb and distillates up 3Mb so forget $88 – they'll be lucky not to see $85 again on no demand.  

    20 USO next week $33 puts at $1.10 in both $25KPs.

  34. Phil

    Sorry, USO next week are the regular December puts actually, there are no next weeklies yet.  

  35. aaronc

    1020/AAPL – If we hit 536 might as well close the gap at 530. That would be one pretty chart.

  36. neetcorp

    Large POMO Buy operation Today , Large Double POMO Buy Operation Tomorrow, and Large POMO Sell Operation Friday.
    Obama also set to speak at 10:50

  37. dclark41

    What a hatchet job on AAPL. Here are some more possible flimsy reasons for the drop. This seems to be all we get when it gets raped like today. A couple of analist who say nothing (Schatz yesterday & the usual suspects on CNBC) and mindless interpretations of events that may or may not happen.
    http://finance.yahoo.com/news/apples-shares-getting-clobbered-152947270.html
    http://blogs.barrons.com/techtraderdaily/2012/12/05/aapl-off-4-digitimess-ominous-footnote-to-blame/?mod=yahoobarrons

  38. neetcorp

    Apple weakness trumps the positive 10AM data. AAPL acted like no Tomorrow.
    20 day breaks  is a concern.

  39. jabobeast

    Phil and Neetcorp—how do you think the mkt reacts to tthe POMO and Obama-speak?

  40. stjeanluc

    It's also possible that AAPL sales will take a dive when the word ends on December 21 in which case the price action is justified and we could possibly go lower!

  41. terrapin22

    HPQ back to $14.  that was quick.  

  42. Inkarri19

    Morning All – Hearing of some idiotic rumors of margins on Apple stocks being raised by someone.  Not sure it's true but strange to see Apple drop 5%+ unless someone knows something we don't, which is the norm nowadays. 

  43. terrapin22

    I'm hesistant to add more hedges here.  this happened last year at this same exact time.  looked like we were going to break down and fall to new lows and then wham market rallied from mid Dec thru March without a single significant pullback.  

  44. 1020

    aaronc/AAPL  Yes Sir!  That would be a nice higher low on the daily….

  45. yodi

    Sure some big shots dumping AAPL just to get the price down and get the sheep over the cliff!!!! 26$ in a day is quite a drop!!

  46. biodieselchris

    AAPL snaps back a bit here? With all these weeklies you can put together a nice spread…

  47. neetcorp

    S&P overbought condition removed

  48. Jbur

    APPL:  I can't help wonder whether the tremendous pressure on AAPL is because there are billions of dollars in long term capital gains sitting out there and people are trying to avoid the higher 2013  LTCG rates, whatever they may end up being. 

  49. williex

    Phil
     
    Sorry that was a Stjean post on Frum
     
    Meanwhile, the shock of slowly but steadily rising prices for fuel and electricity would drive economic changes that would accelerate U.S. economic growth.

  50. Phil

    Obama – Not much to say really but nice blow-off bottom while he was saying it.  

    Reasons/DC – It's always something. 

    POMO/Jabob – Not sure what a big deal that is anymore after all these years of it.  Obama's speech seems to be being taken as a net positive though.  

    HPQ/Terra – No particular reason for that either.  

    Margins/Ink – Not rumors, I think it's true.  Could cause a bit of selling but shouldn't be this much unless people are way too levered with AAPL. 

    Hesitation/Terra – As I said earlier, it's not what we do during the day but where we end up that matters.  Hopefully we get a full reverse off the morning nonsense.  

    AT&T (T) has bumped up its 2012 smartphone sales forecast to 26M from 25M, while adding 6.4M smartphones were sold over the first 2 months of Q4. For reference, Ma Bell sold 6M smartphones in the first 2 months of Q4 last year, and 6.1M in the whole of Q3. The disclosure is a modest positive for Apple (AAPL), given the iPhone accounted for 77% of AT&T's Q3 smartphone sales. And also for Synchronoss (SNCR), whose software provisions and activates AT&T's smartphones. 

    Europe closing slightly up in the end.  

  51. heroheralal09

    hi PHIL,
    with natural gas coming down wats ur view on it
    is it a buy now or we will repeat last years prices given the weather
     ur advise and views are appreciated
    thanks

  52. kustomz

    Markets getting whackier by the week.

  53. dclark41

    Jbur
    i thought that was the reason for the drop from 700 to 505? Like Phil said: "It's always something."

  54. Peter D

    Virtual Short Strangles portfolio update:
    Sell 10 AAPL Dec 480 puts for $1.65, buy 10 AAPL Dec 460 puts for $0.9

  55. millcreek

    phil,
     
    anyone holding the fcx has to feel like they got one to the groin.
     
    i was thinking of a b/w and fortunately held off cuz of the cliff issue.
     
    maybe let the dust settle or do you think step in. ,,,tks

  56. neetcorp

    jabobeast
    The whole morning session wreaks of a programmed driven shakedown before the heavy liquidity injections both today and tomorrow that how the POMO works.

  57. Phil

    Wow, what a crazy market.  Now the Dow is up 110.  

    Cap gains/Jbur – It's possible but that should make it quite a buy next year.  

    Nat gas/Hero – We are pretty over-supplied with nat gas and that's not going to go away.  $3-4 is about the right price for it so no bargain at $3.67.  

    Low natural gas prices in the U.S. and weak prices for carbon permits in Europe are pushing more polluting coal into Europe where it is being burned to generate electricity, Royal Dutch Shell (RDS.A) execs say. Since the start of the decade, coal exports to Europe from the U.S. have increased fivefold, resulting in a reduction of ~23B cubic meters of gas being burned in the European power sector this year.

    FCX/Mill – They are using their cash to diversify to oil and gas – not a bad idea but will make for slower growth for a while at least.  As above – I'd wait for them to hit $30 but keep an eye on those long-term short puts.  

  58. jabobeast

    great call neetcorp—thx!

  59. stjeanluc

    Makes you wonder what the market would be like if AAPL weren't so beat up today!

  60. Inkarri19

    Read Kyle Bass' latest letter last night and it is an interesting read.  His views seem to be a bit more serious than others but definite similarities with Gundlach and Gross lately.  Worth a read when time permits.
    http://www.scribd.com/doc/113621307/Kyle-Bass

  61. stjeanluc

    Looks like negotiations with China Mobile are not easy for AAPL. Technology is an issue but apparently there are problems around financial terms:

    http://www.engadget.com/2012/12/05/china-mobile-iphone/

     

    When asked, Yue said: "technology is a problem, but it isn't the entire problem, there's also mainly the issue of business model and mutual benefits."

    They have 700 millions customers so playing with a strong hand!

  62. 1020

    Veery Nice – The house cancels Thursday's session and are headed home for the weekend…..
    http://www.washingtonpost.com/blogs/2chambers/wp/2012/11/30/2013-house-calendar-slightly-longer-than-2012/
     
    Nothing like an underworked, over compensated, government job……  :(

  63. Pharmboy

    CHTP….done.  Out….small position.  They will go penny stock way….

  64. stjeanluc

    House / 1020 – And these same guys bitch that public employees have it too good…

  65. chasw

    1020,
    Apparently Congress misunderstands the word "entitlements"

  66. Phil

    Bass/Ink – He touches on the main long-term bullish issue – money supply.  CBs have created so much money that inflation is inevitable down the line – that's the bullish investing premise for the long-term.  

    China/StJ :

     

    China Telecom, one half of China's iPhone vending duopoly, has been taking pre-orders since November 20. China Unicom, its main rival and China's second-largest carrier took in more than 100,000 online orders just on December 4, news site Sina Tech reported.

    China is Apple's second-largest market after the United States.

    Here’s a list of iPhone handset prices around the world compared with China:

      16GB 32GB 64GB
    China* US$849 US$978 US$1,106
    Hong Kong $721 $824 $927
    United States ** $649 $749 $849
    Singapore $778 $893 $1,016
    Taiwan * $753 $876 $993
    UK $851 $964 $1,125

    Prices collated from Apple websites. Tax not included.

    House/1020 – These are the same guys trying to bust union jobs and criticizing their vacation schedules and benefits.  What a joke!

    Volume stronger today.  89M on the Dow at 1:53 – good for a reversal day (if it sticks). 

     

    Though Pandora (P -18.9%) is diving on account of its FQ4 guidance, it has received a bit of good news courtesy of CNET'sGreg Sandoval, whose music industry sources claim an Apple (AAPL -4.5%) Internet radio deal with all the top studios is "nowhere near to being completed." That's in-line with an October report claiming studios have balked at Apple's insistence on a lower royalty rate and more flexible playback, in exchange for a cut of iAd sales.

    More on Apple: In addition to higher margin requirements, some think shares are lower due to a Digitmes column noting sources think Apple may cut its calendar Q1 iPhone component orders by 20% Q/Q. However, it isn't clear if the sources are merely speculating about a demand slowdown, or if their opinions stem from current trends. Apple's calendar Q1 iPhone sales fell only 5% Q/Q this year, but that was partly because of a giant Chinese inventory ramp. Cirrus Logic (CRUS -2.8%) is again following Apple lower.

     

     

  67. craigzooka

    IRA PORTFOLIO update

    We plan on building up to a 10k position in FCX.  So, to start lets execute the following

    SELL 1 FCX FEB 30 PUT $1.14

    BUY 1 FCX FEB 20 PUT $0.08

  68. Phil

    Interesting that AAPL is down 5% and the Nas is down just 0.5% as AAPL is a 1% drag on the Nas.  S&P is positive and AAPL is a quarter-point drag on that index too so a lot of buying going on while AAPL is pushed into the ground.  Market breadth indicators should be interesting later.  

    Notice sector chart below shows most in the green.  Will be interesting to see how long de-coupling can last.  

  69. stockbern

    AAPL / Holiday shopping update:  I just came back from our local Apple store. There was an express checkout for pads and some phones and other misc items.  They are sold out of both models of the 21.5 inch imac, as well as some laptops.  I was directed to order online and was told delivery could be up to two weeks.

  70. Phil

    XLF flying – $15.93.  

    Poor AAPL can't get back over $550. 

    There is this IDC report that shows AAPL will lose market share – from 53.8% in 2012 to 49.7% in 2016 but an optimist might note that the total market will grow from 122.3M units to 282.7M units and that, according to my math, would be more overall sales for AAPL by more than 100% but right now everyone is focused on the easy headline that AAPL will lose some of their dominant market share over the next 3 years.  

  71. Phil

    PCLN $666. 

  72. Inkarri19

    Phil – Not to mention the Apple death cross chart CNBC fas pon their site. 

  73. stjeanluc

    The problem with that death cross is that a lot of people make their exit decisions based on that. Not logically unreasonable, but not necessarily confirmed by history.

  74. Inkarri19

    StJ – I just still find it amusing that certain stocks fall out of favor while others don't and are touted as good stocks/companies. 

  75. stjeanluc

    IDC / Phil – Projections to 2016 are somewhat suspicious to begin with as something completely different could show up in between (from Apple for that matter). I am sure that people were making similar projections with RIMM in 2005 for 2009 and looked at what happened. But if that doesn't happen and their market share gets to 49% and even if their margin compresses (which will happen), then that would be a bullish case for Apple. Which is not reflected by the market. And that's the mystery of 2012… Can't be all margin squeeze and profit taking.

  76. stjeanluc

    Indeed lnk…. Look at AMZN and CRM. Like the article from Pharm mentioned this morning, the more they lose money, the more valuable they become. It has to be galling for Apple shareholders!

  77. Phil

    And the dam breaks into the close!

    Someone punched the sell button hard.  AAPL $540! 

    Dow volume up to 124M with 10 mins to go – very interesting.  

    Maybe people are making room to rebalance FB into the Nas?   

    Gosh this is silly.  

  78. shadowfax

    Phil
    reversal!! called that right. AAPL is not going away or loosing much, they have to invent rather than improve to go to the moon. What I saw was the management was fighting and blaming, never a good thing, drops all moral. $400 to 500 is wishful but doubtfull. Growth in iphone is limited by compitition but the rest is Apple, just hope they say away from TV as it will suck the life out of them. I say start a distribution network from a clean slate with all that cash.

  79. jelutuck

    The last time AAPL made the death cross was late September of '08 (probably lots of death crosses around then).  It did fall another 35% or so, but looking on a long-term chart, that was a pretty good time to buy!

  80. Inkarri19

    StJ – Subtract out cash and Apple's P/E ratio should be about 7 while AMZN's is about 3,347. 

  81. rpme

    Volatility reminds me of pre QE, I am slowly buying here.

  82. stjeanluc

    But you and I don't make the market lnk!

  83. Inkarri19

    Good thing StJ because if we did, YMI would be a $300 stock!

  84. Phil

    Pretty solid 157M on the Dow at the close, probably over 160M when they are done counting.

    AAPL volume was 36M, up from 20M average so plenty of people selling.  Now the death cross is the topic of conversation but I'm more concerned about how 36M $540 shares ($19Bn) that traded back and forth caused AAPL to drop $35Bn in market cap in a single day.  If you believe the pundits – AAPL is selling off due to margin requirements changing at the clearing houses, changes in capital gains laws (that only affect AAPL, I suppose), loss of market share, margin compression, supply constraints and weak demand – although you would think the weak demand would mean the supply constraints are not a big deal.  When you hear that many bad things all thrown at a stock at the same time – you have to be a little suspicious.  Will be interesting to see how they finish the week.

  85. stjeanluc

    It looks more and more like the GOP is selling out the top 2% and becoming the party of the top 0.1%! If you look at their proposal, they are proposing to raise revenues by capping deductions for example and who gets hurt by that? Not the top 0.1%, these guys don't carry mortgages. But a lot of professional couples making between $250K and 500K are going to get hurt by that. In exchange for that bone, the GOP wants the top tax rate to stay the same and rates on dividend, capital gains and estate to stay the same and who profits from that – the top 0.1%. 

    And they are willing to extend the tax cuts for the lower 98% but in exchange they want spending cuts that will actually affect the bottom 98% (the top 0.1% don't care about S.S., Headstart, student loans and Medicare). So they give you $1000 today but you'll have to work 5 more years, pay more for college and for your health care when you get old. What a deal… I don't know how these guys sleep at night!

  86. kustomz

    I must question if Tim is even a human. Maybe its just the lighting.

  87. shadowfax

    STJ
    I wonder how many have body guards, $25K, deductable, cheap insurance! Maybe they should look at the $50K guards?

  88. cturb

    . Phil-I think the same guys that bought AAPL last month at $520 and saw it ride up to $595 recently are selling now. Makes total sense to me if they want to cash in at a lower tax rate before year end. I think they will be buying it back now this next week before the announcement of a deal. Pretty smart

  89. shadowfax

    After hour can't be right bid and ask the same price? Same guy? Bid 81.97, Ask 82.01 but a few hundred thousand trade above and below, the 14 250K blocks sell for 82.0388, then a few at 81.98. Who are those guys????????? Bid/Ask now .96/.98!

  90. rj_jarboe

    Phil/SVU
    If the rumors are true and Save-a-lot was sold off and Albertsons was sold off do you think SVU would still be worth $3 per share? Obviously SVU would get cash, but not sure how the debt would be structured. I think the entire company was easily worth $3, but I am not certain of the value left after selling these entities. Evidently the market thinks all will be well, but I am not sure how those of us with options instead of shares would end up in this type of sale. Can you comment on how you think the Income Portfolio position would be affected if this type of sale played out? Thanks

  91. wappler

    Search/Phil,
    The search function on this site does not seem to work or maybe I'm just too stupid for this.
    For example, entering the search phrase "being more discipline with" (sic!), search will find three articles with the exact same quote.  So somebody said the exact same thing on Jan 23, March 14, and Sep 3?  I don't think so.  Plus, when you go to the referenced articles, the quote is nowhere to be found.  Something's rotten in the land of search!
     
    Please go ahead and try it, you'll see what I mean…

  92. wappler

    Winston, Lincoln/SPX,
    I believe it is one of you who strangles SPX and has a long put below the strangle that serves as a hedge.  Partha and I discussed the idea this morning and we were wondering how this structure would behave in a flash crash.  Would you be able to walk us through your assumptions for such a case?  TIA!

  93. Phil

    The GOP never gave a damn about the 2%.  It's always been about the top 30,000 and what they can get for them.  Low taxes, no Government interference, government money for their projects….  Political history is full of one party being nothing more than a puppet for the richest family in town and that's all the GOP is.  What happened to "Family Values"?   It was all BS – they will say anything to get votes but, when push comes to shove – it's all about taking care of their real bosses – the top 0.1%.

    Timmy/Kustomz – I think he's some sort of android…

    AAPL/Cturb – If so, they have lousy timing.  

    SVU/RJ – I don't like it.  It's a half-assed deal and we don't know what we'll be left with.  I'm for bailing on this pop and that will go for the Income Portfolio too.  

    Search/Wappler – I don't know much about it but please contact Greg (admin at philstockworld dot com) and let him know what's going on.  It should work better than that. 

  94. neetcorp

    The million dollar question is whether AAPL can continue to make $50 a year in the future. iPhone doesn't sell well in China now. Part of the reason is that AAPL doesn't support TD-SCDMA. NOK stock is up today because it just announced a TD-SCDMA Windows Phone with China Mobile. AAPL can continue to ignore the carriers if they continue to be the dominant player like when Steve Jobs was the CEO, but all the phones can do the same tricks iPhone can do now. Can they continue to command the kind of margin for iPhone without the innovations driven by Steve Jobs?

  95. stjeanluc

    Big move up for the Dow on the biggest volume day in a while. But Nasdaq is below its 200 DMA again and looking at a death cross soon. All rest on AAPL there. NYSE was up but Russel was down. The S&P is still hugging its 50 DMA and going nowhere. Strange day!

  96. zeroxzero

    December 6, 2012 | 0210 GMT

    The Syrian military has loaded the precursor chemicals for sarin into aerial bombs for possible use against its own people, NBC News reported Dec. 5, citing U.S. officials. The military reportedly is awaiting final orders from Syrian President Bashar Assad. The report comes as rebel forces have reduced Syrian President Bashar al Assad to little more than the top warlord in Syria.

  97. stjeanluc

    If you are an airplane buff you have to look at that video:

    http://www.newairplane.com/787/dreampass/

    Great stuff on the Boeing 787 with takeoff and landings from the cockpit with a 360 camera and comments from pilots.

  98. stjeanluc

    Zero – I guess it's the beginning of the end for Assad…. If he pulls the trigger on the chemical weapons he will have very few options left in the world and might find himself at the wrong end of a heavy and explosive object!

  99. zeroxzero

    Stj  / Tech :  I have a new laptop, which might be the problem, but PSW seems to be very unstable, reloading continuously, and making it tricky to post comments. It doesn't seem to be happening on other sites.  Is it me?

  100. zeroxzero

    I have read and re-read the Kyle Bass piece, and, to put it politely,  it is scaring the crap out of me.  Timing's uncertain and the end is always near, to paraphrase The Doors.  Inflation – well, we always knew that there had been enough printing to trigger years of 5-8% inflation once monetary velocity picked up, which, in practical terms, would appear to be when bailed-out, paralyzed with fear commercial banks start lending to the middle class again. But ol' Kyle is painting a potentially far uglier picture.  It no time to be turning Japanese, surely.
     
    My kneejerk reaction to the prospect of future inflationary panic is "buy gold" but that seems a brutishly unimaginative way to deal with it.  TIPs?  Guns & Ammo? Stocks? Which? Hugh Hendry says "buy gold, avoid gold miners, since the government will become extraordinarily interested in taxing them as gold rises."  "Food", one might say.  Throw in a few Hurricane Sandys per year and I may have to go "end of the worlder" and build a Fuhrerbunker.  Living in the Western Hemisphere is probably sound.  But prophets have been predicting the end of the world since they figured out they were living in one, and, statistically speaking, our lives are so short that I'm more likely to be stung to death by Africanized honeybees than extinguished by apocalypse, so I'd be content to put together a sound inflation-oriented equity portfolio and chill. Suggestions welcome.

  101. rkyroma

    zerox- Do you have a link to the Kyle Bass piece?

  102. zeroxzero

    rkyroma:  Here it is.  Thirty-one pages.  Amazing piece, really.  Japan — geez!!  http://www.scribd.com/doc/113621307/Kyle-Bass

  103. 1020

    I like this guy's work:
    http://money.msn.com/investing/why-not-jump-off-the-fiscal-cliff

  104. dclark41

    1020
    I don't always agree with you on politics, but I do, as you, agree and like the author's assessment. We have gotten so far off track that we can't even agree on sensible  solutions. Perhaps we do have to go over the cliff to get serious. Thanks for the article.

  105. Winston

    Wappler/SPX – strangles. Not me, too expensive – I go lower down the food chain. Of course you could try search :)  

  106. Phil

    Good morning!

    IPhone/Neet – AAPL's main problem remains that they are making as many phones as it is possible to sell because they are still using components that are bleeding edge for their phones.  At some point, that may stop – after all, it's just a phone – but who would have thought how much cooler a 5 would be than a 4 was?  Maybe in a few years, they will cease to innovate and move towards low-end, low-margin competition, like they did with the IPod and maybe, unlike the IPod, instead of continuing to dominate the category, they will get their ass kicked by competitors who suddenly get it because Steve Jobs isn't there and maybe there won't be any ancillary product sales of IMac and IPads and there will be no AAPL TV and they will not have any other ideas at all – it's all very possible.  But is that a reason to not buy AAPL now?  It's not like they are over-priced making $50 per $540 share with $140 per share of cash in the bank.  If they were a coal mine or a cruise ship or a shoe store, people would love them.

    Big Chart – Still curling over remains the story. 

    Syria/ZZ – I have bad flashbacks when we begin talking about our intelligence pointing to the preparation to use chemical weapons.  

    Reloading/ZZ – That's a new one to me.   Better let Greg know. 

    787/StJ – Surprisingly normal looking.  

    Inflation/ZZ – No different from our Secret Santa's Inflation Hedges of 2010.  Those all seemed to work with minimal inflation and I'm sure similar trades would do much better when actual inflation kicks in.  There is nothing better than being able to buy long calls in an inflating market so no need to rush it.  We used 4 ETFs to hedge for Home, Energy, Food and Financial inflation and all of them worked with returns that were many multiples of actual inflation.  Maybe I'll update it for 2013…

    Cliff/1020 – Other than the unpleasant market panic – I'm all for just letting the cuts and taxes roll right in.

    Markets still drifting today – as expected. 

  107. aaronc

    Jerconn – even a broken clock is right twice a day. :-)

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