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Friday, March 31, 2023


Wednesday Worries – AAPL Makes $76,103 While You Read This

$76,103 – That's not sales, that's profit!  

Every minute of every day, AAPL is making $76,103 (at $40Bn a year) on the sale of $316,120 worth of products.  No company on Earth comes close to that kind of metric and, overall, the stock's performance clearly indicates that but, if you listen to the MSM, you would think AAPL is finished.

We had a nice, in-depth discussion about AAPL in Member Chat this morning and we not only concluded it's still a buy but we came up with a lovely spread that has the potential to turn $3,000 into $45,000 between now and Jan 2015 if AAPL simply holds $600 – needless to say we're very proud of that as it's always nice to have a trade or two in your portfolio that returns 1,500% and we rarely get a chance to do them with a blue-chip stock like AAPL.  

Note in the above chart, that AAPL is still a relative outperformer this year – shown priced against HPQ, DELL, INTC, IBM, CAT and ISRG – all good companies that have simply failed to keep up.  We also like HPQ at this level, now $14.30 as their REDUCED guidance has them earning $3.62 per share next year after earning $4.05 this year and that's still 25% back on your money, which sure beats TBills and we're not even counting the $18Bn in cash they have on hand, which is quite a lot when you consider that their entire market cap is now just $28Bn.  Small wonder HPQ spent $9Bn buying back their own stock last year, when it was priced 100% higher. 

HPQ is a pretty good candidate for a buy/write, where we Buy the stock for $14.30 and Write 2014 $15 puts and calls (sell short) for $5.50 and that nets $8.80 on the trade and, if HPQ is below $15 in Jan 2014, then another round of shares will be put to you at $15 for an average entry on 2x of $11.90, which is 17% below the current price and, if HPQ is over $15 in 16 months, then you get called away at $15 for a $6.20 profit on cash (75%).  Buy/writes are our favorite tools for making long-term entries – see "How to Buy a Stock for a 15-20% Discount."

As we mentioned INTC in the above chart, let's look at a similar trade idea for them.  INTC is nicely beaten-down at $22 but may go down to $17.50 before stabilizing so this is a bit early but we can buy the stock for $22 and sell the 2015 $20 calls for $3.70 and the $15 puts for $1.50 and that drops the net entry to $16.80, which is 23.6% off the current price and lower than we think it's likely to fall and we're only committing to buying another round at $15, and that's 32% off the current price, which would give us an average entry of $15.90 – worst case.  If called away at $20, our gain is $3.20 of our net cash investment of $16.80 or 19% over 28 months – not a bad return for betting Intel simply doesn't fall more than 10% lower than it is now but nowhere near as exciting as HPQ because it's considered less risky and we're being more cautious as we don't think it's bottomed yet.  INTC is also kind enough to pay you a .90 dividend while you wait – adding another 5.3% to your annual return!   This is better than T-Bills folks…

Now, back to the markets.  As we can see from our Big Chart, we're having a bit of a pullback, with the Nasdaq and Russell down 5% from the September highs and the other indices down roughly 2.5% so far. 

The Nasdaq made a critical failure yesterday as it fell below it's 2.5% line AND it's 50 dma at 3,082 while the Russell is right on their 50 dma at 824 and in danger of failing their 2.5% line at 820 as well.  The S&P is our most important indicator and it looks like they are right on that critical 5% line at 1,440 – our only index not to fail that level and that is all of our remaining hope so we'll be watching them VERY closely this week.  

Should the S&P fail – then the Dow has no support down to 13,295 so they'll make a nice short but we're still hoping we won't have to pull the trigger on that one.  Going into this dip, TZA was our primary hedge in the Income Portfolio and our April $15s have gained .40 since Friday (16%), well outpacing the 2.5% drop in the Russell for a nice offset.  

Otherwise, we're still long-term bullish as nobody notified us that the Fed has withdrawn QE3 and it was just yesterday that China threw another $40Bn into the markets.  What's bumming everyone out this week is worries about earnings (not so bad so far) and all these TERRIBLE pronouncements from the IMF's meeting in Tokyo this week on the state of the Global Economy.  At PSW, we've been telling you the Global Economy sucks for months so it's not surprising to us but it seems to be shocking the sheeple – who are now running for the exits but, as noted on the Big Chart – certainly not at anything like an alarming pace so far.  

In order to climb a wall of worry, we need to first recognize and accept those worries and what we have here is the beginnings of capitulation after a very long period of denial (where bad news was good news into the Fed).  This is why we prefer to buy now with a 20% downside cushion – we're a little early to call it a bottom but the FACT of QE3 means we may not make too low of a trough on the way down so we're using this earnings season to do a little bargain hunting.  

Tell us when something new happens that we should be worried about but, so far, China's slowdown we've been discussing all year, Europe's mess is 2-years and counting, California Cities in debt crisis also old news, Japan staggering under 220% debt is bad, but just 10% worse than 2 years ago and 7.8% US Unemployment is the best reading since Obama took office and the only thing we have to worry about there is whether or not Jack Welch's head will explode if we go down to 7.7% next month.  

So far, earnings are coming in better than expected – we'll see how the week plays out but this correction may be shallow indeed if it turns out we've underestimated the recovery in the US and overestimated the impact of China and Europe slowing down.  


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The verizon store, no Apple store here, doesn't stock them, special order.

Thanks DC! Corrected.

What is your opinion on edu?

SHADOW you need to get your i phone thru your service provider huh?

PHIL GREAT POINT ON MARKET SATURATION..I think china dependence is big mistake anyway…just look at japanese carmakers….plummeting…sales crashing just because of a stupid goat filled island…so on top of the chinese economy being a massive house of cards that will implode much more over the coming years….you have to worry about the govt reacting harshly to our govt actions…and their people shunning our products.

ONE OF MY FIRENDS just bought one A 64 GIG 2 days ago from at&t wireless over the phone…she said 14-21 days til shipment and that people were getting them much sooner than that

MY FRIEND FURTHER STATES : there are NO covers at the store either…which is annoying…the guy said the 3rd parties didn't have enough time to build them…yet you can order them online from numerous outlets…and the aluminum scratches much easier than prior versions…so you really need a case immediately

DIA puts – picked up some 134 puts when SPX broke 1440 this morning. gain paid for a bunch of QQQs. now a close trailing stop is on…

ZLCS – sure, small quantities.

Wow, high beta things are getting crushed.  Fixed income also taking it across the board….nice.

Those $650 next week calls are now $8.10 with AAPL @ $641.16.

…but it sure looks like it wants to go higher.

AMRN broke down….here we go…..

PHIL my friend still insisting he bot 64 gig on phone form att..odd huh?

AMRN – 1/2 out at 35c.  Will put a stop on the rest at 10c trailing.  I can't watch it today.


AMZN/AAPL – someone rolling out of AMZN and into AAPL?

Given the new taxes in place in France and the fact the rich are leaving France now – would it not be wise to short the French Banks?  And if so, which one do you think is the best to short?

no glass

stjeanluc…….Her'es what to do with the virtual  MoMo port.   AAPL is the present MoMo, so put 10 January 620s there for 56.00  

 ebay starting daily deals now on services…see ya grpn wouldnt want to be ya

AMZN  $247.25!

Don't forget that they suspended their dividend in July.

MoMo portfolio / lflan – OK. I guess we continue the portfolio for now!

Phil / AAPL:  Your AAPL play looks interesting, but the numbers don't add up.  Is this because I use Schwab?  (1) Short $400 put: margin is $4000 ($12K for 3) PLUS value of put, so no immediate credit for sold put.  (2) BCS is $5000.  Therefore, net cost to account: $9000 per unit.  And (3) selling naked weekly calls – against what?  There is no long naked call to sell against.  Should I change broker? 

Gamble play/ AAPL weekly 645 at $3.50 (were above $6 a few hours ago) trying to get them for $3

Finally, bonds are wake up.

Checked out the Apple store here in SoCal inland empire on Saturday. Constant line of 30 to 50 people to get iphone5. Rest of store did not seem to have the usual Saturday crowd though. I have the 4s and probably will not upgrade until next year when 4g coverage is better.

bought AAPL 630/635 BCS for 3.55

The case against patents:


One might hope that if it is indeed worth preserving such a large government intrusion into private activity that during the intervening six decades evidence would emerge that patents do indeed serve the desired purpose of encouraging innovation. Sadly the story of the past six decades is the opposite. In new industries such as biotechnology and software where innovation was thriving in the absence of patents — patents have been introduced. Given this continued extension has there been a substantial increase in innovation in recent years? On the contrary, it is apparent that the recent explosion of patents in the U.S., the E.U. and Japan, has not brought about anything comparable in terms of useful innovations and aggregate productivity.

Iphone 5 scratches – seriously folks, It's a phone you'll replace in less than a year…..

Phil / iPad:  I, too, have an iPad, had an iPhone [now Samsung], both still on AT&T, and I don't get an iPad 4G signal hardly ever, even when it sat next to either of the phones with a full strength signal.  Antenna?  I don't get it.

So Phil,   Are we officially short these?
AAPL $25KP – 2 of the calls stopped out.  Now we want to sell 2 next week $650 calls for no less than $8.50 if AAPL goes back below $640 to replace the $8.50 we just spent.  That's also where we'll likely roll the remaining 4 if we break $650.  

Phil/ iphone
I like the 4s enough that I am not motivated to rush out to get the 5. I usually like to let some other sucker buy the first round on anything until it's clear the bugs are worked out, even if its an apple product.

Phil/AAPL- those who forget the lessons of history are condemned to repeat them. I remember this forum before the frenetic activity changed into hourly trading of AAPL options, and those who dared to flip options over the short term were condemned as peasants who had no patience. Fortunately this reader took Phil's advice many moons ago:
Sold AAPL Jan 14 300 put for $18.50 now trading at $7.07
Sold AAPL Jan 14 380 put for $34.96 now trading at $17.02
Sold AAPL Jan 14 410 put for $35.65 now trading at $22.40
Phil, you are hiding your light under a bushel. And without wishing to offend, Lflan's approach can only work for himself – I do not believe it is reproducible by anyone else. Recommendations for flipping options on a daily time frame sails close to the wind of providing investment recommendations – something which I feel we should steer clear of on this forum.

7 Biggest Lies about the economy by Robert Reich:

I'm sure this goes for both sides but incredible how slander and libel laws don't apply to politics at all.  I wonder if they did, would it keep them on their toes to be more honest.

can u recommend a play on natural gas

Oil making a stand at PP? Not liking the beige book it seems!

Finally some sense in AMZN. S2 is about $245 and we are getting there. I also have a Fib line at $242 or so. And $240 seems like a decent line so we might settle around here. 

AAPL traders…….look at the AAPL one day chart today, and look at the DOW chart.  The DOW is steadily down and AAPL is in what I call a moderated wave.   So today, right now, daytrading not likely to work for you.  So, I traded it lots yesterday, none today.  The setup is not favorable. 

Okay. I miss read it. Thank you Phil

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