Apple AAPL

AAPL has been the talk of the globe and today a colleague asked me about Apple and what I thought of it at the moment, my answer was simple, I told her to forget about it and here’s why:

1- Extreme optimism about the company, everyone and their aunt is bullish AAPL at the moment except for the big boys who are willingly selling their holdings to the misinformed public.

2- Selling Climax on the 15th on Ultra high volume (53.7 million shares) on a day that closed at its bottom. This will most likely lead to a sideways market at best!

3- The thing just went Parabolic! Which is another major sign that this thing has topped (short term at least). Again I refer to my first point.

4- AAPL's move was on the back of earnings that smashed expectations, AAPL had revenue of $46 billion when it was estimated that it would earn some like $38 billion. Now my question is? Can AAPL really earn much more in the future? Anything is possible even though I think it’s going to be difficult.

5- Its $502 a share for crying out loud, and if the retail investor got interested at this level he would need (100*502) $50200 to buy 100 shares! Could this same investor possibly stomach a pullback and handle the volatility? I don't think so; I already see blood on the streets. I read about a guy of whom I won’t name that said AAPL could be traded with good risk management, my thoughts were what risk management? The danger of this thing going down was far more likely than the opportunity that it remains in parabolic mode. The risk/reward simply isn't favorable here no matter how you look at it.

Summary:

Technically, AAPL looks like it’s due for a correction sometime soon, whether its distribution or re-accumulation remains to be seen. A move below 490 should trigger some panic selling which should send it all the way down to around the $450 level. The risk/reward at this phase just doesn’t add up, especially after AAPL exhausted itself at $530 after moving $100 from the $430 level. Fundamentally the stock is sound, the company has loads of cash and the ability to handle anything at this point, $48 billion in revenues and about $100 billion in cash is no joke. My play however, would be to stay away from AAPL at the moment, until it falls back to more attractive levels where I would wait for confirmation before getting long.