I’m tracking 100 shares with a profit-adjusted cost basis of 119.90. The position originated with a tout last week suggesting bottom-fishing at 128.19, stop 127.56. At a current price of 134.42, the theoretical gain would be $1450 after imputing partial profits taken at 129.40 and 130.06. AAPL has subsequently traded as high as 136.00 this evening on fabulous earnings news released after the close. While impressive, the short-squeeze has left the stock well shy of a major target at 143.97 that we’ve been using for months.
So where to next? The chart shows a whacky ABC rally pattern begun from a 129.91 low recorded a split second after the earnings announcement. Ordinarily I would discard this low in calculating a rally target. However, the precise pullback from the 136.05 midpoint pivot with which 129.01 is associated lends credibility to the pattern itself. Accordingly, we’ll use 139.09 as a minimum upside objective over the near term.
Technicals aside, the stock appeared to be struggling for loft following the initial pop to 136.00. My gut feeling is that the short squeeze lacks the viciousness we’ve come to expect when world-beating companies exceed earnings expectations. Assuming Apple cannot leap the 136.05 midpoint resistance overnight or at the bell on Tuesday, I would expect the stock market as a whole to get socked hard. This is mainly because Apple by itself seemed to be holding up the broad averages yesterday, so fearful were traders of getting short ahead of the earnings news. _______ UPDATE (9:56 p.m. EDT): The stock was all over the place Tuesday as Wall Street’s maniacs demonstrated once again that investors collectively are not so omniscient as the professoriate would have us believe. We’ve held onto our 100-share tracking position, no stop-loss for now, since the company looks even better now than it did a day earlier. Apple is selling more stuff at higher prices — an anomaly in the retail world, especially consumer electronics, and although that can’t continue forever, there’s no reason to expect it will end sometime in the next quarter. _______ UPDATE (April 29, 11:36 p.m.): We’ll stop the position out if the stock trades below 127.92. That’s four cents beneath a midpoint pivot whose breach would portend more downside to at least 127.15, or possibly 126.34. ________ UPDATE (5:19 p.m.): The stop-loss spared us an unpleasant ride to an intraday low of 124.58. Instead, we exited with a theoretical gain on the position of $800 for each 400 shares originally purchased.