Posts Tagged ‘GOOG’
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
Profit from the Death of a Mobile Mega-Merger
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Friday, 02 September 2011 11:53 | |||||
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The $39 billion mega-merger of AT&T (T:NYSE) and T-Mobile is all but dead… killed by the Department of Justice’s antitrust lawsuit. The way the two stocks are behaving, there is no chance this deal will get done. The action taken by the DOJ came extremely fast and in a form of a brick wall. Is the Deal with AT&T and T-Mobile Good for Consumers? There are arguments on both sides. Some say that the merger will bring jobs and better pricing. Others that think the duopoly between Verizon and AT&T will force customers to accept mediocre service, non-competitive rates and less selection of services. The second is probably more right. Two mega-companies with about 100 million customers each would be able to reduce their costs and increase profits so much that they would essentially make it impossible for another carrier to compete. They could provide lackluster service and set prices…not a good consumer environment. AT&T is going to fight this, but I doubt they will win. If the deal does completely fall apart, AT&T will have to pay a breakup fee of $6 BILLION to T-Mobile (owned by German company Deutsche Telekom). That’s a big charge, considering that 97% of AT&T’s entire network was supposed to be upgraded to 4G (that’s the newer, faster generation of technology) at a cost of $3.8 billion. It looks like the consumer will be penalized after all… Without this deal, AT&T, T-Mobile and others will have to step up competition by improving their networks and technology to attract customers. Without the “instant-growth effect” that AT&T thought it was going to have, it has to pick up the pace. Otherwise, coveted iPhone and Android power-users like me are going to leave them for a cheaper, better alternative. Rise of the Smartphone You see, I do EVERYTHING on my phone, and I use a ton of bandwidth. I’m not alone: The number of global smartphone users is growing at a breakneck pace, and phone companies are actually working against us. My carrier, Sprint, is one of the only phone companies to offer unlimited data usage over its network. AT&T, Verizon (VZ:NYSE) and even T-Mobile do NOT offer any unlimited plans: They actually charge you by usage, and even throttle your speed down if they notice you are downloading a lot of data. Thanks, guys… The major mobile carriers are not just doing this for greed and profit. Their networks are running at full capacity. If more and more users are added, customers will see dropped calls and slow downloads. Not good for retention. Just about every phone sold now is a smartphone that uses a ton of Read more |
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Is Gold the New VIX?
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Tuesday, 30 August 2011 09:58 | |||||
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I use statistics to predicted major movements in the market. Some signals are bullish, like this one I wrote about in Smart Investing Daily on June 7th. Just recently I found an abnormality in the way that options were being priced and traded. Back on July 22nd, the signals I saw were pointing to move sharply lower in the Nasdaq and S&P 500. Sure enough, these indexes dropped 18% almost immediately. I find these early warning signals in charts, trade volume, options, news stories, and in abnormal trading activity. I also find signals in correlations between securities. (This is one of my favorite signals.) But correlations can hard to spot. Correlations in the MarketBelieve it or not, just about every investor has come across a correlation in their analysis. For example, many investors look at something called beta. A stock’s beta tells us how volatile it is compared to the market. If a stock has a beta of 1 it should be moving at about the same rate as the index it belongs to. For example, Google (GOOG:NASDAQ) has a beta of 1.13, which means that if the market is up 1%, Google is going to be up about 1.13% on average. Stocks can have negative betas as well. The company China Green Agriculture Inc. (CGA:NYSE) has a beta of -5.52, which means if the market is up 1%, chances are this stock is going to be DOWN 5.52% on average. Most stocks, commodities and metals have natural relationships with one another. When these correlations become “disconnected,” it can be a sign that something is wrong. Major disconnections can be a Read more |
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Those of you who know me know that I love statistics and that I’m always looking for ANYTHING that gives me an “edge” or “early warning signal.”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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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
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
Sell Apple Before the July 19 Crash
Tuesday, 12 July 2011
The past few days have shown the first cracks in the market’s newly formed foundation. There are more to come.
Two weeks ago everyone got über-confident and started buying stocks like crazy.
The S&P 500 gained 7% in eight trading days… an amazing feat considering the current state of things. This brought the major averages back above their 50-day moving averages, a bullish sign for shorter-term investors.
The broad market has remained amazingly resilient in the face of poor economic data here in the U.S. as well as geo-political issues and economic catastrophes (like Greece) around the world.
Nonfarm payroll data came in at its worst level in almost two years. And consumer confidence here in the States has been moving steadily lower since February.
And yet, investors still have an appetite for risk. The pros call this the “risk on” trade. Investors are buying stocks ignoring the economic data.
When the risk is on, the stakes are high and companies must deliver results. Earnings season kicked off yesterday with Alcoa (AA:NYSE). If a company doesn’t deliver more than is expected or misses a forecast altogether, crashes (small and large) can occur, especially in skittish markets like the one we are in now. In stocks with elevated P/E ratios like Netflix (NFLX:NASDAQ) and LinkedIn (LNKD:NYSE), this is even more likely to happen.
But would you believe that Apple (AAPL:NASDAQ) could be on the chopping block, too?
Why I Am Scared of Apple
Let me first say that I am a huge fan of Apple. It set the bar for computers and electronics with the Lisa (pre-Macintosh) back in the ’80s. After falling out of favor in the ’90s, the company has reclaimed its role as demigod of the tech sector.
Even with this status, Apple could be dangerous, at least over the next week or two. The Apple iPhone is its top product and accounts for 54% of its share price (forward estimate). But the Apple iPhone is under Read more