Re thinking beyond the Technical and Earnings on APPLE

Keep Your Technical Systems Simple. Simplicity Breeds Elegance

I used fundamentals for nine years and got rich as a technician.– Marty Schwartz

 After seven sessions of the downside move since its reversal bar, the S&P 500 Index fell 1.5% last week and closed at 1,411.94. The Dow Jones industrials lost 1.8%, and the Nasdaq dropped 0.6%. SPY closed at 141.30. The poor performances on major indexes for last week are blamed by disappointing earning reports and guidance from big tech companies, such as IBM, GOOG, AAPL, FFIV, AMZN, etc.

But noticeably, some beaten down stocks had powerful bullish reversals from their recent lows seen in AMZN, NFLX, MNST, CMG, etc.

GOOG remains in a trading range after being crushed sharply on earnings. Its chart pattern after such a hard sell-offs could use time to build a base before next big moves.

AMZN’s powerful reversal demonstrated how dangerous to short an oversold stock especially during its ripping-face-off bounce regardless of its lousy earnings. It closed at 238.24, right above its 100-day SMA. The wild price action on earnings makes me appreciate how important to be disciplined to follow Dan Zanger’s golden rules.

The negative sign I observed is that some stocks jumped up on their earnings pulled back hard from recent highs, such as REGN, FB, SWI, etc.. Rotation keeps going, making the market volatile. Trying to catch an absolute bottoms is not the best way to trade profitably during a correction for swing trading. 

Triggered by its weak earnings and lowered guidance, AAPL lost 5.54 points and closed at 604 last Friday on heavy volume with an intraday low of 591, only three points short of its 200-day line. To me, AAPL could retest its Friday low or even its 200-day SMA line before a decent bounce. Trading it well requires fast action to catch its intraday swings with proper entries or just wait for some constructive consolidation before aggressive buying.

Before calling AAPL another CSCO which lost its tech leadership a decade ago, I’d like to share some thoughts from my personal experience during this weekend.

Five weeks ago on 9/23/2012, I wrote a blog and posted my AAPL chart. I had notes pointing out its bearish reversal when it closed at 700. I also told a story that my sister and I tried to persuade a friend to update his flip cell phone to an iPhone. He is an old-fashioned gentleman who never used a smart phone, a computer or an email in his life before.

After getting my fourth iPhone – the iPhone 5, I felt I was less excited about having this new gadget in hands. I have been impressed by Samsung Galaxy phone’s appearance, and also heard good comments by some friends.  So my sister and I decided to get Samsung Galaxy S 3 smart phone instead of an iPhone for our dear friend.

Yesterday or Saturday late afternoon, we convinced him to go to his Verizon carrier office, and finally bought the new Samsung Galaxy S 3 phone for him. Since all my family members use only iPhones (not Samsung phones), we wanted to make sure to figure out how to navigate this Galaxy phone ourselves before teaching our friend how to use it.

Despite being a medical doctor, my sister has built her own computers, writes her own blogs, and is active on Chinese Twitter – SINA’s Weibo. I have had two Palm Treo smart phones and four iPhones, so I consider myself a smart phone expert.

But it was so frustrating when we tried to figure out how to make the new Samsung phone work properly!

–          It missed phones calls when we dialed my friend’s number right in front of him; the text messages failed despite trying to get help by dialing 611 or finding answer on Google; the sound quality is not as smooth; the ring tone options are limited to choose from; the fancy features are very hard to navigate; the phone heats up fast and runs battery quickly…

–          It is far more complicated than the iPhones we have. It’s definitely not going to work for our old-fashioned friend who needs only a simple phone to make calls!

Today or Sunday morning, after trying to reach our friend for hours, we finally got a phone call from him. He told us:” thank you both for the nice thoughts and the gift. I spent three hours until 3 am trying to play this new phone, but I got totally lost. I went to the Verizon branch office this morning and switched back to my old phone. All charges should be credited back to your credit card.”

My sister and I were so relieved! We realized that some people like to reach their friends with real sound of their voice, not by text messages or emails through gadgets or computers.  

–  A simple life filled with emotion is the way some old-fashioned people enjoy living. So just let it be!

Meanwhile, thinking back how excited I used to be when I got my first Palm Treo smart phone, then how VERY excited when I received my first iPhone, to how LITTLE enthusiastic when I have my iPhone 5 which is nearly perfectly designed and built, I realized that I,  like many, have higher expectations and become more critical about our nearly-perfect products.

–  Just like the life we live, the more we have, the more we forget to appreciate what we have!

Since I was little, I have always been into calligraphy, singing, dancing, and art; therefore, falling in love with Steve Job’s beautiful and innovative products like iPod, iPhones and iPads is so natural as they are much simpler, more intuitive, more user friendly and reliable.

So far, my own experience with the Samsung Galaxy phone makes me realize:  the iPhone by Apple is for me, and my love for Apple products should last for a long time.

The bottom line is: 

The competition among top smart phones made by Apple, Samsung, and HTC has been going on for a while, but it is how their products could strive to become better.

Each person enjoys certain type of phones according to his or her needs or styles.  However, Apple should keep majority of its loyal customer base and will also gain new ones.

Keep in mind: with lowered guidance for next quarter and very high demand for its products (A friend of mine sells only Apple products online and told me that people even pay him $200 more for the new iPhone 5 than its store prices.), it could easily beat the adjusted estimate numbers for next quarter. Watch how AAPL chart pattern is being developed in order to trade it well.

Always be Flexible with an open mind when trading!

AAPL YTD Daily Chart with Notes:

SPY Daily Chart with Notes:

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About Angela Zhou @z8angela on Twitter

I am a full-time swing/day trader trading stocks & options. I got into stock trading/investing since the internet bubble in 1998. I am optimistic in life and objective in trading. The purpose of this blog site is for me to share my trading experience and market view with others. I may write something about life experience and living, too. My motto is: A Great Mind Becomes a Great Fortune. I love people and life, and I appreciate beauty in everything. Thank you for viewing!
This entry was posted in Market and Trading, Trading and Life, Uncategorized. Bookmark the permalink.

6 Responses to Re thinking beyond the Technical and Earnings on APPLE

  1. markalan says:

    What a great article about Samsung vs AAPL! There are many analysts stepping on the Samsung bandwagon about the quality of resolution in the photos and screen, but they mention NOTHING about the problems you just posted regarding the clarity of voice calls, misses calls, texts, and difficulty of navigation. Always smart to hear the other side of things from real experience. Great job!

  2. Trader says:

    Yeah Apple might still have a small advantage but that small advantage means going from monopoly pricing to competitive and that should hit the margins. Real story will be whats Apples next product just as iphone was add on to ipod and ipad add on to iphone. I have a feeling there is more in the stream than just mini pad.

    Either way no shame in stepping out of apple for a bit and letting the stock tell you which way it wants to go. Also I have never had an iphone but love the Galaxy S3, so there are a lot of people that will not be brought into apples ecosystem just because of similar competing products. Law of diminishing returns suggests that although apple may not be over, the returns may be less.

    I don’t have those problems mentioned and see no difficulty using Samsung S3

    • Sarks says:

      I have been a dedicated crazy Apple fan since the beginning. My first computer in the 80s was an Apple. I have loved every product that came out over 20 years and also owned Iphone 1, 2, & 4.

      For the first time in my life I switched to Samsung after playing with the demo phones.
      I ordered the Samsung Galaxy Note II which won’t be out until Nov 9th. I will still buy the iMacs, just no more of the Iphones.

      Thanks for your article. Great Job!

  3. JP says:

    I have Samsung galaxy nexus and my wife has a iphone 4 and have the complete opposite evaluation of the phones. I cannot understand your assessment from our experiences. We are also on the Verizon network. Her messages do not often times push through to her phone until hours later. After having to go to the verizon phone for a fix we were told we have to periodically update for tower locations, but that didn’t change a thing. After researching this on the net this is not an uncommon complaint. I am also completely satisfied with my nexus photos. Her iphone 4 is not even close to my nexus in features, performance and reliability. A relative just got her first smart phone, an S3 and absolutely loves the phone. In closing I cannot relate to what you are saying, if we could trade the iphone without taking the financial hit we would. Those Samsung commercials about the iphone people in line for the new phone absolutely ring true for us. Bottom line Apple lovers will mostly always be Apple lovers, for me I go for performance and value without having to be into the latest craze.

  4. Frank Mancuso says:

    Galaxy works fine for me. Decision was easy after i saw the iphone 5 . (Shmidgin bigger and thinner).

  5. vegastrader says:

    Thanks for posting about your iPhoneGalxy experience. I have an i4 waiting to up-grade to i5. Almost bought the Galaxy because I was tired of waiting for the iPHone to come back in stock. But I do like the bigger screen that the Galaxy offer. Still waiting!!!! Almost thanks for posting your $AAPL trade ideas. I trade $AAPL all the time myself. Like the recent low of 591 or the 200MA for a an re-entry on the long side. See you on Stocktwits.

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