“Apple stock has fallen over 77 points since the December high. True believers look at this pullback as a small bump in the rally road, while company detractors believe that recent cracks in the growth story could escalate into a full-scale collapse we head through 2008,” Allan Farley writes for TheStreet.com.
“As a technician and trader, I have little insight about iPod, iPhone or Mac sales going forward,” Farley writes.
MacDailyNews Take: That’s for sure, at least.
Farley continues, “But I can read the charts and see how they’re shaping up after the recent plunge. Is now the right time to reload positions for a trip back to the highs? Or should current investors jump ship while they’ve still have the opportunity to salvage a few profits?”
MacDailyNews Take: Did he say “charts” or “stars?” The latter would have about as much credibility as the former when it comes to forecasting a mould-breaking company like Apple.
“What conclusion can we reach looking at the long-term Apple chart? Well, it isn’t good news for the bulls. The rally off the 2006 low was parabolic in nature. As a rule, parabolas end poorly, as we’ve discovered with the housing market in the last two years. So it’s likely the long uptrend has finally ended. In its place, I’m looking for lower prices, or a sideways period lasting for up to two years,” Farley writes.
“Can long-term, deep-in-the-money Apple longs use this technical viewpoint to their advantage in the months ahead? Of course — there are many things they can do to protect profits and reconsider their goals, given the broadly negative outlook for 2008,” Farley writes.
MacDailyNews Take: “Broadly negative outlook” from a guy who’s gazing at his navel a chart with no other information. Ridiculous.
“First, they can lighten up after the stock bottoms out and retraces a good part of the recent downtrend. Second, they can buy long-term equity anticipation securities (LEAPS) or use shorter-term options to dampen volatility and lock in profits. Finally, and perhaps most important, they can just end their love affair and look for the next tech juggernaut, which is waiting patiently for their discovery,” Farley writes.
Full article here.
Yeah, but what do the entrails say? Forecasting stock performance based on charts alone is folly, especially with a company like Apple. Oh, wait, there are no companies like Apple.
Apple’s latest quarter set records for revenue ($9.6 billion) and net quarterly profit ($1.58 billion). Apple blew away expectations with record Mac shipments (2.319 million), and also achieved record iPhone sales (2.315 million) along with record iPod sales (22.121 million). The Street punished Apple because they fear a recession and because Apple didn’t promise them what they wanted for the upcoming quarter. Apple merely promised Q2 08 revenue of “about $6.8 billion,” which would be 29.3% over Apple’s Q2 07 posted revenue of $5.26 billion. In other words, the ever-conservative Apple expects their business to grow 29.3% year-over-year in Q2 08.
With iTunes Movie rentals, the new Apple TV “Take 2” software update coming, larger capacity iPhone and iPod touch devices, booming Mac sales, the iPhone/iPod touch SDK looming, 3G iPhone, the world’s best OS, and more – Apple continues to fire on all cylinders.
You can’t see all that if all you’re doing is staring at a chart.
Is this Chris Farley writing this article?
faith or fear – take your pick.
Relax folks. This is technical analysis. His analysis is quite sound from a technical point of view. But understand that technical analysis doesn’t take into account anything but stats – directions, numbers, time on the market. Apple has historically proved technical analysts wrong.
There is no science to stock charts; predicting future performance by looking for patterns in a stock’s chart is as accurate as reading tea leaves.
My girlfriend just bought a new iMac two weeks ago on top of a shiny new 160GB iPod Classic last month. Plus, I’m planning on getting at least a couple new shuffles and maybe even splurging finally for a 16GB iPhone. Yeah, I think Apple’s best days are in the past
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This guy is full of shit. As far as technical analysis goes this asswipe does a pretty piss-poor job of this and has no insight as to what Apple is all about. There may be a downturn, but everyone is headed for a downturn. But that’s the economic climate we are in now. Remember, that drop in price happened during a week when everyone cried “recession” AND Apple’s guidance was lower for next quarter. Everyone freaked over this, thus the huge point drop.
But to bail now would be foolish, and now may be the best time to invest. Farley should get another job.
What do you mean AppleTV Take 2 coming – It has been here over a week… and by the way it is really sweet..
Numbers. Knowledge. Power.
A handful of numbers tells nothing. Like looking out your window, testing the wind, then saying, “The numbers tell me the earth is flat.”
Gathering a bunch of numbers, you look out your window, look at NASA satellite photos and data, find other earth and geometry information and say, “The earth is round, spinning at a tremendous rate, and rotates the sun in a parabolic orbit.”
This guy is doing the best he can with ONLY the numbers he knows. A bad start and a worse finish…
The Street has always been down on Apple to some degree– and I’m not saying this to argue whether he’s right or wrong. It’s just that they have a vested interest in pimping web hits. And here in lies a major problem with “news” sites that ultimately feed of swings in news– they want things to be unstable. That’s certainly something to remember when listening to any news organization. Propaganda isn’t just what they tell you is happening, it’s what they leave out of the story. Farley’s choice to highlight certain aspects of his analysis leave out others that may (strongly) contradict his position.
But that wouldn’t lead to many clicks, now would it?
Why anyone would take the advice of a technical analyst is beyond me. I have read more loopy BS from chartists than I can recall. The great minds analyzing Wall Street have all looked at one thing: fundamentals. It’s EARNINGS and CASH FLOW that allow for a clear understanding of a publicly traded company’s performance, not a bunch of squiggly lines and reading of tea leaves. I will continue to depend on the wise thoughts of Warren Buffet and Peter Lynch to assess Apple and other publicly traded companies, not some whack-job from Cramer’s outfit.
So long as Apple continues to post solid earnings, and the company’s quarterly reports beat the often insane estimates for the company, I won’t care a whit about what idiots posing as pundits have to say. Peter Lynch was prescient when he said that a company’s stock price eventually and invariably tracks its earnings. The two are always correlated. While the timing of a stock’s price often is ahead of what earnings will do, eventually, they link.
Personally, I think the decline in Apple’s stock price has more to do with Wall Street both trying to short the stock and take profits as large institutional investors drove the stock’s price down (in a bald-faced attempt to cover for the losses they incurred by causing the real-estate meltdown by absurd, non-existant risk management of mortgage-backed securities) than anything Apple has done. Much of the fear over Apple’s earnings is based on speculation and not fact. While big money can build a stock’s price up or down, eventually, what propels a stock is the company’s underlying performance as represented by earnings.
No idiot looking for teacup patterns on a stock chart will ever comprehend that. And that is why I choose to ignore their alleged counsel. You should too. Otherwise, you are better off joining the flotsam that are day traders.
He wants you to sell so the big boys can buy it up cheap and then let the stock blast to 600. What a butt munch.
Steve checks his sales charts everyday to find trends and patterns.
thestreet.com belongs to jim cramer who loved aapl at 200 but now hates at below 130. All this is to help fulfill cramer’s protect that aapl is going lower. World class journalism I tell you:)
How long will it take for people to understand that so-called technical analysis” has not one shred of veracity based on unbiased, methodologically sound research. Don’t believe it? Do a little research – it’s total BS. Technical Analysis of the ups and downs of the stock market belongs in the same dustbin with astrology, alchemy, phrenology, Piltdown Man and thousands of other idiotic ideas disseminated by the ignominious history of legions of charlatans.
We need to continually identify these people as the charlatins
Looks like everyone here is reading something I don’t see. Having bought 1000 shares at 170 I don’t see such a rosy picture. Sales, profits, products all great and yet the stock has dropped like an anchor. What will it take to turn it around? I hope all you folks are right but I still project a bottom at about 100.
TheStreet.com is one of Jim Cramer’s babies. Jim Cramer has publicly bragged about manipulating stock prices for hedge funds.
http://www.reuters.com/article/bankingfinancial-SP-A/idUSN2036292620070321
TheStreet was behind the rumor last August about the decrease in iPhone orders. It was a lie.
http://macdailynews.com/index.php/weblog/comments/14442/
F*ck TheStreet. TheStreet is a dirty place and I have no interest in their manipulations. They are trying to beat the last bit of short interest out of AAPL.
Further to Buffet Head: Then too, maybe some investors have lost their shirts on prime crap mortgages, in which case they have run out of cash, can’t borrow at low interest due to credit crunch, etc, and have to sell things that help them compensate for their losses…liquidation for the nation as it were, causing even good stocks to drop, particularly the big winners. Like AAPL.
So the credit crunch can affect even stocks that have good omens for the future, simply because the holders need their cash to make up for losses elsewhere. Only the market knows how bad it is, and that’s wherever the demand supply curve lands. How long will it last? How big will it be? AAPL holders need to be able to ride out the storm, even though the financial numbers are truly spectacular. The good are in the same canoe as the bad during credit storms. Fortunately Apple’s stuff is so good it wlll continue to outpace its competitors even in a recession which is good news for us AAPL holders.
Well Doh!
Of course AAPL (the stock)’s best days are behind it. It is NOT going to go up 20+ fold (under 10 to 200) ever again.
Apple is never going to be worth 2 Trillion dollars.
More likely, it will take 1 to 3 years to double in value or so. Making it merely a very attractive investment.
Apple–the company, not the stock–has its best years coming up.
I think MDN is a litle too defensive here–don’t confuse the company with the stock.
Hoot,
Then sell now and buy back at 100. I sold 1000 shares at 190, then like a dummy bought 1000 at 145.
Actually his technical analysis isn’t even all that. Technically you have an almost perfect fibonacci retracement from the beginning of 2007. If you don’t like that you can go back to the July 06 bottom or the Feb 05 bump or back to the post dotcom flats. They match up pretty well. More recently Apple had retracements in July and October. All match up.
Parabolas are driven by sentiment. Has sentiment changed? Yes. Stock price is ultimately driven by what a company produces and their business model. Has this changed? No. In fact it keeps getting better. So the only technical conclusion possible is that Apple is a stock driven by sentiment and therefore subject to retracement. Full stop.
Saying “Apples best days are behind” adds drama but no value. If Farley actually believed it, I don’t think he would be suggesting we buy LEAPS which, by the way, are overpriced right now unless you believe exactly the opposite of what he says).
Going forward, a fibonacci retracement off the low in 2006 and the high last year, suggests Apple will bottom at 110 OR that it has already found bottom at around 125. The bounce back has three possible levels depending on overall market sentiment: 150, 160 and 170. If the stock rallies a little but does not make 150 then it will probably go to 110, if only because hedge funds watch the same graphs.
Of course, which levels we reach on the bottom and the rebound depends on consumer sentiment AND on what Apple announces at the end of this month and their report for the quarter.
Charting is important because many people trade off charts, right or wrong. It is important to know where they will buy and sell. Don’t get so emotional, it’s a stock.
Apple is never going to be worth 2 Trillion dollars.
Check back in 10 years and see if that statement holds.
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Technical analysis is not a science, just like astrology. That doesnt mean that sometimes technicians may be right, just like when some astrologer infers that I am very smart, because I am a Gemini
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Let’s just hope Apple can tidy up Leopard. As a sysadmin, I am dealing with the same hair-pulling problems that were in early Tiger. So far, Leopard has been the biggest problem in my job over the past 3 months, and I know what the hell I am doing. It’s tough when 3 years ago, I walked into a 100% windows environment, and have since changed that to 85% OS X, but Apple needs throw us IT guys a bone. With the demise of XRAID and PoE Airports, and other indicators, I would be willing to bet that Apple is pulling the plug on any corporate endeavors. It’s obvious that they are headed for a strictly consumer-based market, which is sad since my IT evangelism towards Apple could be nearing an end. Apple, just don’t give up on education sales, and please support your education IT guys. We need you as much as you need us….
“Sell Apple, Buy Microsoft”
http://www.thestreet.com/markets/activetraderupdate/10360750.html
Same guy back in June!