Apple Fans or Apple Cult?

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This is in response to a recent blog post titled “Is Apple Stock About To Crash?” written by J.C. Parets @allstarcharts. I, like many others, had to click on the link to see what he had to say about America’s beloved stock. After reading it I thought he raised some good points and made the reader aware of reasons to be cautious of upside price in the future. I also was looking forward to the comments session, why?

I have noticed that if you post anything negative about AAPL, “they” come out. I have been deployed overseas to a third world country and have worked in a jail interacting with some foul people but these hardcore AAPL fans at times scare me more than any of those other people. I have noticed that if a day trader posts that they are short, people come out berating them about how healthy the valuation metrics are or how many products they have sold. Makes absolutely no sense.

Here are some points risen by @allstartcharts:

  • daily and weekly charts of $AAPL making higher highs in price, but lower highs in Momentum
  • currently not a bad risk/reward with a stop above the highs that the bulls couldn’t hold on to
  • “I’ll take a 1.5% risk with the prospects of a few hundred point correction any day” (his risk tolerance at that point could be totally different from others)
  • It’s all about finding good risk vs reward opportunities
  • and at the end “And the best part is that I don’t care about how many iPhones they’re selling. I care even less about the $100B cash on the books. And the P/E ratio? My computer shuts off automatically if I ever type that in.”

In reading this I can tell already that his style is not from a fundamental approach but from a technical approach (the last bullet point clearly tells me this). I can also read this as he is spotting a same pattern that in the past (looking back to April 2012) has shown a drop in AAPL stock price and right now his risk to reward tolerance tells him that an opportunity is present. Could this be wrong and the price shoot up, certainly. But this is why we trade with risk and reward in mind as traders can expect to lose often.

So why in the comments are there mentions of fundamentals or iPhone 5. No where in the post are these things mentioned. Also who’s to say price is baked in or price is not baked in, no matter what there will be some reason for price action. You can’t trade reasons, you can only trade price action. Needless to say I thought he brought an awareness to current structure that gives a warning to traders on how momentum indicators are not confirming price action, simple as that. Also keep in mind the writer’s perspective. How do you get a reader’s attention that only sees the blog post title?

I personally don’t heavily allocate to divergence but use it as that, a warning and that it might be wise to take profits or leg into a position. This post was written to show how powerful the fan base of AAPL is. I almost find it scary that people are so attached to a product and leave comments as if you insulted their kid or someone close to them. Read the post or any in the future for what they are. Remember there are thousands of traders out there and everyone’s style is different. Keep in mind the writer’s style and time frame. In the end when the position is closed and you both make money, what’s there to complain about?

Also I have no connection what-so-ever to the author @allstarcharts. I am merely a reader of his blog site. I wrote this because I previously experienced similar reaction to posting a negative news bit or thought about AAPL and receieved criticism to the point where I had to check my account to see if I was short AAPL and displayed it publicly. In a sense I find it humorous how attached some people are and will criticize when one has nothing to do with the other; ie. day trading AAPL having a long time holder telling me I’m an idiot….apples to llamas.

12 Responses to “Apple Fans or Apple Cult?”

  1. Good post. As an Apple fanboy since the old days of Scully and when we really were the underdogs, I’ve found the anti-Apple crowd to be just as vicious over the years; more so lately since Apple is leading the pack in many areas; I like put it off as them just justifying their fucktarded HTC purchase… I honestly must get 2-3 people per day telling me how Apple is finished on the basis they just bought a Samsung phone and how much they love their TVs….just to taunt me knowingly that I have shares long… no different than all the peeps mocking me for owning any stocks at all instead of more real estate in 2008…

    And yes, it is amazing how emotional both sides get , not as bad as real estate, but very close… I like to think its because of the AAPL blatant manipulation in the options mkt and knowing the fundamentals of the company then watching other tech rip tits over nothing whatsoever gets a shareholder that much more frustrated and emotional…

    • Thanks eddy and you raised good points here. It is amazing how people put their emotions into reply posts when somebdoy has an opposite opinion.

      I respect all traders the same if they just followed their plan, it doesn’t always work out. AAPL manipulation? Has to be one of the most manipulated stocks out there.

  2. Trading is a personal journey, who care what other people think? If your trading system says AAPL is a short; then short it based on your risk profile and management.

    I personally don’t read twitter or stockwit during trading hours. Why adding more noises to the already noisy price action?

    Tomorrow will be an interesting day.

    Good Luck.

  3. Expect nothing less from you zen in regards to keeping to your trading system and I agree on it all. People get wrapped up in the story and AAPL has a fan base like I’ve never seen.

    Noise on twitter is right and I have hit on that in the past, can’t remember specific posts but some recent. Indeed it will be interesting.

    • totally agre with @Zenhunter!
      whether you are long or short AAPL ,you at least have a financial interest in it..to make money. I get that. I respect that. What kills me is those who own zero shares, AND have no interest in buying any shares long or short, anytime soon go out of their way to bash Apple or predict crashes or whatever.. WHY DO YOU FUCKING CARE THEN???? That’s when I usually say.. all that work only to justify why ya fucked up in buying that Motorola RAZR eh?…

  4. I can see you point there as far as making the trade soon. I like to see it as an awareness too as maybe there are those out there that trade divergences and they didn’t see this, kind of like a scan.

    I personally don’t believe AAPL will crash, its just too loved and there will always be buyers. I do think it can see a 10% correction though. Based off that divergence or other technical setups? Not necessarily, but in time just based off unloading of shares.

    • every year there’s at least a 10% correction in AAPL… it just went by.. there’s also a grand buying op in AAPL every Quarter… not necessarily 10% but an op to get in long… I like looking at PE.. when it closes in near 13- BUY; when it nears 17-18, it’ll pull back until earnings release to compress it more… shorter term trades I now base it on options manipulation.. OI tells me the trading range daily and weekly especially near opex… I may have to post something soon on this..

  5. Right yes the 10% was just going off the same idea as you stated. Never looked back to the every quarter.

    The P/E is actually a metric that has worked with AAPL like you stated. I like using YCharts for fundamental graphs.

    Nice exploitation of the OI in AAPL options, never really looked at it for a short term trading perspective but it sounds like you got it down pretty well. I know you’ve posted charts before w/explanation and it is interesting and definitely no coincidence.

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