Wednesday, April 23, 2008

AAPL Earnings...

Every once in awhile, I set out to do something that I know is probably dumb, but I'm determined to do anyway. Most the time, this is a losing proposition.

There's all manner of speculation on AAPL's earnings coming out after hours today. Some are saying they'll at least meet, others are saying they'll exceed. Since there are expectations they'll exceed, they have exceed by something of a landslide in order to break past the priced-in pre-expectations game already being waged. An analyst downgrade today helped cool it down a bit by bumping it down about 8 points, settling in at 160. (You'll recall I bought AAPL in my first stock move; an ill-advised single share at 125 last month.)

It's been slowly trending up as we've been approaching earnings; again the market can price things in based on their abstracted layer of expectations. A meet or lightly exceeds is probably pretty tightly priced in right now.

The flip side of this of course, is if that fail to meet. I don't think this is likely, but if they pull a GE, watch out: The Qs will drop and you'll see the NASDAQ as a whole take a slide. It will be a bad thing.

I don't think they'll fail. I think we'll see some sell off heading into it in anticipation of missed expectations. And then hopefully that'll take some of the priced-in effect off and they'll post good numbers in the call. Apple is a strong brand that has become considerably more price-competitive and is outselling, in terms of growth, their competitors by a 10-to-1 ratio. This helps make them recession-resistant, but in any "splurge" item, we could easily see Apple issue crap guidance for Q3. Poor forward-moving guidance can take the wind out of any positive earnings announcement and can even cause a stock to slide heavily in the face of amazing earnings increases, as seen last week in Intuitive Surgical (ISRG).

There, the market had priced in some sky-high expectations and the guidance shifts scared investors who felt it an indication of hospital belt-tightening and further anemic growth to come in the "recessiveish" market.

We'll see if AAPL follows the same trend.

I'm thinking we'll see some impressive numbers. If AAPL sells off pre-earnings and hits $153, I have an order for 20 shares, STOP @ 152.00, TRSTPLMT MARK-.30 @ 167, which means either it'll stop sell $1 down at $152, or it'll initiate a trailing stop of -.30 cents if the market price hits $167.

We shall see. Most I can lose is $20.

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