Zak Mir Apple results Preview – After The Bubble…

My new theory, which I have spouted privately to a very select audience – people like my 81 year old father(!) – is that economic  depressions can be defined as situations in which bubbles initialy develop in deemed safe havens and then even the safe havens burst. OK,OK it’s not so much of a theory and more a pub bar stool comment!! I would add that as we are now finding out from the Cyprus template, depressions do not end until even the richest people are hit and which would imply that a nuclear bomb or two might add the finishing touch to the current 5 years plus of crisis!

But stepping away from the macro babble and onto a ‘forced’ (thank you Mr SBM editor!) call on Apple – the eponymous iPhone and iPad maker  ahead of the results. Let’s kick off with the weekly chart.

A sense of déjà vu actually set in when looking at Apple’s weekly chart in sense that after Gold’s crash last week where the yellow metal finally returned to its 200 week moving average at $1,473 – the equivalent feature on Apple’s stock would result in a test of $373 as the chart below shows. To me, given that the shares closed yesterday at $398, I am confident that the 200 week line is simply too near now not to be hit – possibly in the immediate aftermath of the forthcoming announcement and so maybe only very briefly. After that, and only after that, should nimble traders think of attempting to bargain hunt the shares once more as it seems legion have attempted to do on various other “oversold” occasions since the autumn.

The primary question however remains –  is Apple merely a retail investor / post bubble / train wreck? A situation where perhaps just as many people will lose money trying to catch the falling knife on the way down as got their fingers burnt buying at the top – yet another definition of the trading environment in a Depression after the bubble has burst or are we know at a true bottom after a wipe out of nearly $300bn this last 7 months?

Certainly, looking at the recent newsm flow on what was an effective “walk on  water” tech play, we are not overwhelmed with bullish items. Perhaps the most bizarre revelation was that the late Steve Jobs had actually been involved in a very hands on way with the new iPhone  – presumably from beyond the grave via a séance.?!! Other aspects are more straightforward in terms of hinting that the world’s former most valuable company has lost its corporate mojo, from news that the iPhone 5S will be delayed beyond June due to problems with the fingerprint scanner through to recent speculation that demand for the iPad Mini – which the late Mr Jobs would have blocked as he hated the idea of a 7 inch table – had subsided.  Perhaps the final fundamental straw is that the product that would really turn Apple mainstream  – the low cost iPhone still seems to be months away….

But clearly for Apple watchers, it is all about the earnings after the bell and the likely headline that the former stock market darling is to deliver its first profits drop in a decade. This would perhaps usually be the cue to think of picking up some stock for the long haul but, with so many punters already having done this at $450, $500 or even $600 plus a share, it still feels as if it is too early to get back on board here to me.

 If I was forced to pluck a basis out of the  air at which I would get back into the stock it would be on a momentum basis – rather higher than present levels. The initial January support was at $435, and therefore for me, a weekly close back above this number would be the first and actually minimum requirement to indicate that a degree of sustained strength was back for this tech stock.