Now that the excitement of watching apple fall 22 points in seconds has subsided it is now time to talk about the reasons behind the price action. It seems a lot of home gamers on and professional traders a like were caught off guard by Apple’s sharp down move after they reported Q3 earnings. My first word of advice is, when a trade seems to easy, it probably is. The trade from 300 up to 318 was almost fee money to some, though to others it was rough as they were short the 300 level.
Apple reports Q4 EPS $4.64 vs. consensus $4.06
Reports Q4 revenue $20.34B vs. consensus $18.86B.
Apple reports Q4 gross margin 36.9% vs. 41.8% prior : *ouch, cost of producing their products is going up because of Chinese wage increases.
Apple has had a parabolic move from 241 to 320 in a month and a half on little to nothing fundamentally changing except primarily dealers pumping POMO cash into beta stocks. Not just tech, everything. You notice how 90% of stocks in this market trade like shit or barely trade at all, but a few high betas and heavy ETF and index components are the only securities moving higher? If you have you are not alone, when mom and pop ride the train into work and check the index quotes they think see them up, they are happy. Though 500 stocks in the S&P and 30 in the dow do not mean shit. Its a Sheraide people, the wool is so thick you can barely breath.
Right now Apple is trading 299, bottom of the trading range today was 292.75. This level on the downside will be one to watch for pre market trading tomorrow. I am looking at the 289 followed by 278 as support.
Oh yeah… the SPY Flash crashed as AAPL earnings were released. This correlation is going to kill us.