Trade Alert – Lots of Apple analysis and locking in some profits on the bankster shorts

Do you see the lines out the door for the newest, coolest, and most unbelievably Revolutionary Apple product ever? The iP…

Oh, wait, there’s NOT any cool new Apple product out there, much less “Revolutionary” in the way the iPod which begat the iPhone which begat the iPad were. Those products created entirely new markets, eco-systems, and economies like nothing else since the personal computer first hit.

The uptake of those products were so huge that Apple literally couldn’t build them fast enough to meet demand. When was the last time you said that about Apple?

Let’s put together a list of reasons why Apple, the stock, has been in such a funk, and then let’s see if there’s reason to believe it can get out of its funk.

So, first:

1. No new product lines since Steve Jobs passed. I’m not the first and won’t be the last to point out how little the products from Apple you can buy right now are compared to what was out there three years ago.
2. Which leads me to this point, which I made in my weekly TradingWithCody.com Live Q&A Chat yesterday: “I’m not so bullish on Tim Cook’s leadership right now. He needs to do something besides show up at work and keep the plane at flight. Steve Jobs would be designing and demanding a new spacecraft by now. Tim seems happy to be enjoying the view. Sigh.” Or to quote Jeffson in the comments section on my blog put it: “I guess that we are entering into the Gil Amelio Memorial Downdraft period. Only this time there is no angry founder available to ride in on the white horse.”
3. Horrible chart. As my Trading Counselor, Elad Ryba, wrote today, “However great that potential is the fact remains we can always invest in a stocks future when the market clearly knows those decisions and tells us positive things are about to start, beginning with an uptrend vs. following a downtrend that can last much longer than any company fundamentals would seem to indicate that could.” A lot of folks out there agree with him, especially with the stock falling into new 52-week lows.

The positives –

1. It’s cheap! It can get cheaper, oh yeah, it can get cheaper. But then again, at 9x next year’s earnings and less than 5x next year’s earnings if you include the cash on the balance sheet in your analysis, this stock is as cheap as its ever been since me and my subscribers first bought it when it was trading at less than cash back in March 2003 and the company was barely profitable.
2. That yield is nice. 2.5% dividend yield in a zero interest rate environment is awfully attractive. (I like Intel here for a dividend play even better but that’s just because it yields twice as much on the dividend.)
3. Customer lock-in and eco-system integration are better than ever and nobody but Google can come close in the next few years.

I’d also like to say that sentiment is so bad around AAPL and such negative sentiment is a contrarian indicator. But I don’t think there’s quite enough hatred directed towards AAPL right now and that there are still a lot of aggressive retail shareholders out there holding on and/or doubling down. So I don’t think we can call sentiment favorable or negative enough to use it as a signal at all here.

What will stop the chartists and bears from continuing to cram down the weakhanded retail and institutional shareholders?

It goes back to the beginning of this article here. We need a new product. The iWatch could be that product and I can tell you that I am stoked about integrating my iWatch to the rest of my Apple eco-system, if and when the iWatch finally gets here. We need to see some incredible new display/projector technologies and ever simpler ways of engaging the world/Internet/others/etc with our devices. Wearable computing is sure to be big but I’m not so sure Apple will really commit to that any time soon. They’ve got other opportunities to drive their eco-system centered around the next gen iPhones with all kinds of iWatch and/or other wearable computing accessories built by both them and outside developers.

A great upcoming earnings report, I suppose, could be a catalyst to spark the stock higher finally, at least temporarily. So too, at least temporarily, would any word of a tens of billions of dollar dividend or buy back or something.

I personally still hold some of the Apple that I’ve had for many years now. You dear readers have seen me buy and trim around my Apple core position for years now and that’s what I still suggest doing. I’m likely to buy some Apple common here while it’s down below $400, just to add back to my core position. It could take some time to get a sustainable pop in this stock. But then again, the stock market sure is good at keeping traders, even Apple bears, on their toes.

Other than that, the bankster brokers, including the Morgan and the Goldman shorts and puts that I have mentioned here on the blog several times, continue to collapse. I’m going to sell a part of both puts here, locking in some nice profits on these recent bank trades.