Posts Tagged ‘aapl’
AAPL: Buy Ahead of Tuesday’s Announcement?
- Published on Monday, 03 October 2011 15:54
- Written by Jared Levy, Editor, Options Strategies Weekly
I’m not here to tell you whether Apple is a good or bad company. That’s not going to make you money. As a trader, it’s my job to figure out how the masses will act when there is an event such as earnings reports or a product launch.
It’s the ability to understand and calculate the crowd’s mentality that separates an analyst from a successful trader or investor.
I would be lying if I said it was an easy task.
For Apple (AAPL:NASDAQ), the stakes and expectations are high. Even though Apple tends to downplay future expectations, it is an industry leader that must deliver big. The new iPhone launch tomorrow could be a big one for Apple’s stock in the near term, so be prepared.
Does Apple Still Have the Edge on Competition?
The iPhone, which has been out for almost five years now, has a few more adversaries to confront and conquer, and they are serious contenders.
Don’t get me wrong; the iPhone is an awesome product that was a trendsetter in form and function, but iPhone’s innovative design is now the norm and is losing uniqueness and sex appeal. There are several things we have to think about before buying one share of Apple ahead of Tuesday’s (alleged) unveiling of the next generation of its flagship product.
First off, the iPhone accounts for about 53% of Apple’s revenue. That’s a lot riding on one product that is highly scrutinized. It is a huge seller and always exceeds sales expectations, but by how much and for how long?
As cool as the device may be and as innovative as Apple is, the iPhone is being copied and improved upon every single day. The original iPhone was a game changer, but now it’s showing a bit of age and losing its place as the cool, must-have smartphone.
Google, HTC, Samsung, Microsoft and others are doing everything they can to steal the iPhone’s thunder: 3-D phones that have faster processors, more memory, and increased flexibility and functionality are creeping into the iPhone’s market share.
But the secret may not be all Read more
AMZN: Tablet Market Wars Are Heating Up
- Written by Jared A Levy, Editor, Options Strategies Weekly
I remember my father telling me over and over when I was a kid, “Don’t be a copycat!” He told me to create and innovate, to be an individual and a leader.
Copying from your classmates in school was grounds for expulsion.
But in the world of technology, copying and cloning is rampant and has been for a long time. It’s quite easy to “improve upon” an existing product or idea and make it something seemingly new and unique.
Take the tablet market, for example. Its form factor has been around for over a decade. I remember using them in the late ’90s on the trading floor. Back then you had a special pen to maneuver the cursor and make selections.
Today, tablets are the new craze and just about everyone wants to be in on the action. Unfortunately, there may only be room for a select few.
The big winners in this game will be the content and software providers… the ones who can monetize the compulsive consumer and integrate many types of features into one device.
Google, Apple and now Amazon are the strongest contenders. But you won’t believe how another company is benefiting from this market.
Amazon
Earlier this week, Amazon.com (AMZN:NASDAQ) launched a new array of Android tablets aimed directly at Apple. The top-of-the-line “Kindle Fire” is meant to compete directly with the Apple iPad, which currently has Read more
The Most Unpredictable Market Event
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Friday, 16 September 2011 09:05 | |||||
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This theory, developed by Nassim Nicolas Taleb, describes a Black Swan event as one of three things:
In essence, a Black Swan event is something that has such a small chance of happening that it’s not accounted for in the models that the quants (quantitative analysts) use to predict risk. These quants use statistics to figure out just how probable a trade is going to be. Being a bit of a math junky myself, I use these same calculations. But being a trader, which many quants are not, I know there is a human element that NO model can predict. What most of us don’t realize is that Black Swans happen much more often than we think. In fact, we could be on the precipice of another… Usually the worst Black Swan events in the market occur when people are off guard or beginning to feel like a major problem has been solved. When markets are emerging from what appears to be a bottom and major catastrophe seems to be averted, our defenses are down. Black Swan events occur just when everyone is feeling comfortable, not vulnerable. This was exactly what happened at the end of 2008, right around the time the world’s investment guru Warren Buffett injected Read more |
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The Black Swan Theory describes unpredictable events of extraordinary magnitude. The meltdown of 2008/2009 would be a perfect example of a major Insider’s View: The Future of Apple
Friday, 26 August 2011
Wednesday evening, I was going over my trades, getting prepared for the days ahead. I use one of the best news services out there. It gives me headlines the second they are released around the world…
Up on the screen popped one of the few headlines that disturb me:
17:28 AAPL Trading Halted: News pending (376.18, +2.58, 0.69%)
When trading is halted, something big is happening. Most of the time, it’s not good. My first thought was something terrible happened to Steve Jobs.
Six minutes later this headline was released by Apple:
17:34 AAPL *STEVE JOBS RESIGNS AS CEO, NAMED CHAIRMAN; TIM COOK NAMED NEW CEO
In the back of my mind I was relieved that Mr. Jobs was alive, but I knew this day was coming. Steve Jobs has been skirting his health issues and trying to remain strong. Much of the market knew he would step down eventually, but didn’t think it would be right now.
After Apple started trading again 15 minutes later at $356, I immediately thought that apple stock was a buy at that level, at least for now. With the stock back up at $374, the real question is whether you should still be buying Apple here or if this is the beginning of the end for the tech giant.
Steve Jobs Versus Tim Cook
Apple is Steve’s baby; no one will run Apple as he has. This is a man who started Apple out of his garage in 1976 along with Steve Wozniak and Ronald Wayne. It is impossible to replicate that passion.
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| The Apple Lisa cir. 1983 |
Believe it or not, in the early days Steve was known an aggressive taskmaster who was extremely difficult to deal with. Even so, his forceful, erratic and wild demeanor helped transform the way humans interacted with computers in a big way. He popularized the Graphic User Interface (GUI), the mouse and the desktop set of icons that are still popular today.
More importantly, Jobs remade Apple into the largest company in the world by market capitalization.
Here’s why Steve Jobs is Read more
World Debut: The Microsoft of the New Millennium
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Tuesday, 16 August 2011 08:52 | |||||
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Google is now a hardware manufacturer. Never in the history of the company has it produced a product that consumers can actually hold in their hand. At $12.5 billion, the purchase of Motorola Mobility (MMI:NYSE) is a drop in Google’s big cash bucket. Motorola produces high-quality phones and has a clean reputation with most consumers in the smartphone industry (not like RIMM). This will be a major leap for Google and a catalyst to propel it higher in the coming years. MMI lacked a marketing catalyst and its brand was lost in the shuffle. That made it a prime candidate for Google to snap it up. That, and this: Motorola Mobility’s 17,000 patents. They are a sort of immunity to the lawsuits that happen so frequently in the smartphone industry. With the patents in its pocket, Google can focus on creating a “super phone” that integrates all the best features of its Android system with a sleek, functional, high-quality piece of hardware. Apple is the only other company that does this. But unlike Apple, Google will still license its operating system to other phone manufacturers. That means increased partnerships with demand for new apps and functions. This could hurt Apple. Apple doesn’t share well. It must have missed that lesson in kindergarten. The company lost a similar battle to Microsoft in the ’80s. Apple only offered its operating system on its own computers, while Bill Gates let anyone buy a copy. This sent Apple into a 12-year hole and made Microsoft one of the most profitable companies in history. It may not be that bad this time around, but Apple has a serious, more powerful contender in Read more |
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Yesterday was an epic, game-changing day for Google (How to Make Money in This Mess
| How to Make Money in This Mess | |
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Tuesday, 09 August 2011 09:10 | |||||
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Savvy investors can use volatility to make lots money in a bear market. There is a secret about the Volatility Index (VIX) that can potentially make you thousands of dollars. What Does the VIX Really Symbolize?Think of the VIX as a “fear” indicator. Most investors — and even some experts — don’t know how to actually use it. You may hear things like “if the VIX is high, it’s time to buy” or that when the VIX is high, people are scared. But the real question is, how does it affect my financial investments? Let’s first take a look at how the Volatility Index tends to react with the markets. Below you see a chart of the S&P 500 (SPY in green) compared to the VIX (in black). The two generally have an inverse relationship. When the market is rallying, the VIX is dropping and vice versa. To put it simply, the Volatility Index has a direct relationship with options prices. As people buy options and the VIX goes higher, options get more expensive. When people sell options and the VIX drops, options get cheaper. So here’s the thing… What if you bought a call option, had the stock rise, and either lost money or didn’t make as much as you thought you would? Did you ever think that a falling VIX was eating away at your profits? If so, then you have discovered part of the secret. If you’re loving this article, sign up for Smart Investing Daily to receive all of Jared Levy and Sara Nunnally’s investment commentary.
Here Is How It WorksWhile you might think that Wall Street is manipulating Read more |
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Investors are scrambling to figure out which way is up and what the market’s next move will be. The one thing that we can bet on in the near term is more volatility.
Bear Market: The Strategy to Avoid the Pain
Friday, 05 August 2011
I often say the stock market is always looking three to six months ahead with tunnel vision.
But from time to time, the market stops to take a look around. When the blinders were removed last week, the market realized it was no longer in Kansas. A swirling tornado of debt, economic and consumer weakness, and near frozen credit conditions across Europe brought a rude awakening to what has been a careless stroll for equities.
Some traders are calling for the markets to retest their 2009 lows. I have my own theories on that, which I will share with you shortly.
The next question is, will the tornado unwind, or will this swirling mess spin faster? You would be surprised at what some of my friends on Wall Street are doing.
When Margin Calls…
In just two weeks’ time, the Dow Jones has lost over 1,200 points. More importantly all three major indexes not only have gone negative on the year, but have all broken below their 200-day moving averages. This is an extremely bearish sign and usually means a bull market is coming to end.
In seven of the past nine days, selling seemed to pick up just before the markets closed. At the same time, volume increased. In my experience in the pit, when investors are selling into the close on a down day, we are entering a bearish market.
This selling snowballs when traders who bought on margin have to sell their shares to cover margin costs. Typically a trader will wait until the very last minute to execute this trade: The calls come at 3:30 p.m. ET.
Look at the 15-minute chart below. I placed the volume Read more
Government Debt Solution Will Kill the Economy
Tuesday, 26 July 2011
The government’s poor money management is coming home to roost at the worst time. The “solution” to the U.S. debt problem will be some level of austerity and/or tax increases, both of which are sure to grind the economic recovery to a halt.
A double-dip recession is not just possible… it’s likely.
How bad could it get?
The unemployment rate could surge to 20% and mortgage lending standards may get 400% more difficult — and that’s just the beginning.
If mortgage rates rise (which they will soon) it will become even harder to get a home loan. The minimum down payment for “qualified” mortgages could increase to 20%, removing a large amount of prospective buyers from the marketplace and drive home prices even lower.
U.S. Government “Underemployed”
Because the odds of not paying their bills are much higher, individuals with poor credit must pay higher interest rates if they want a loan. High credit card, loan and mortgage rates keeps these folks locked in a vicious circle.
The government is about to find itself in this same cycle.
Right now the U.S. has a AAA credit score, the equivalent of 850 on the FICO scale (which ranges from 300-850). With that score, the U.S. can borrow money (sell bonds) at the lowest of interest rates. If the U.S. were to lose its “risk free” status and/or default, its borrowing costs would rise substantially.
Worse yet, Washington is bringing in less income now. High unemployment and underemployment mean less tax revenue. Americans are making and spending less than they were just a couple years ago.
Like so many of its citizens, the U.S. government is underemployed. This is where the cycle begins…
The U.S. dollar is the world’s reserve currency, which means our money is at the center of the world’s economy.
Take China for instance; it owns $1.15 trillion of our debt. Imagine Hu Jintao getting a notice of default from the U.S. Treasury Department… the reaction would not be good.
America’s next payment of $30 billion is due on Aug. 15 — and that’s just interest.
Here are our biggest debt holders.
The federal government, like Greece, will have to Read more
Where Wall Street’s Smart Money Hides Out
Friday, 22 July 2011
The masses and major media are making it seem that all is well in the markets. Over the past few weeks the Dow and S&P made strongly bullish moves and the Nasdaq reached 11-year highs.
Even with all this positivity, something is very concerning… and it’s not our government’s battle over our debt.
When I was trading on the floor of the exchange, I paid close attention to large orders trading in the option pits. These orders were coming from heavy hitters such as Goldman Sachs, JPMorgan or another large firm. If they were buying huge quantities of put options (which give them the right to sell a stock at a set price), I would trade along with them or find out why they were bearish.
When a big player like Goldman makes a move, it is for good reason.
The knowledge tucked inside these trades is invaluable, but is next to impossible to find. So I want to show you a little trick.
Volume Is the Cause, Price Is the Effect
Volume drives price. When there are more buyers than sellers in the marketplace, prices rise. When the sellers are in control, prices fall.
To find what the “smart money” is doing, some investors monitor large trading blocks of stock to see whether it was a buy or sell order. Unfortunately, the boys on Wall Street have tricks up their sleeves that make it hard for us to know what is really going on.
If a Wall Street player were to place a market or limit order (like most of us do through our brokers) to buy an extremely large quantity of shares, the price might go through the roof or vice versa when they want to sell.
That’s because the trade would be visible to everyone in the market.
The “Smart Money” (hedge funds, top traders, insiders) on Wall Street does EVERYTHING it can to hide its orders. Just like Texas Hold’em, the best bluff with a brain wins… and these guys play every second of every day.
Smart traders are always looking for ways to take advantage of less informed investors. The best hide their buy and sell orders so that they can get in and out unnoticed and without influencing the price of the stock too much.
Back in the ’80s and ’90s, markets were extremely inefficient. There were a slew of ways traders could game the system. Remember, computers and the Internet were still new and not widely used.
Trades happened much slower.
I recall being a trader in the Wild West days of the SOES bandits. These day traders would use Read more