Tuesday, September 9, 2008

Announcing the Wilderness Investor Forums

MORE BIG NEWS! Zach has moved his Wilderness Investor Group to a phpBB style discussion forum, anyone can join! You can get there now by clicking, www.zacharybass.com/forum.

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Friday, May 23, 2008

Zach's Apple Investor Blog, Investor in the Wilderness Has Moved

BIG NEWS! Zach has upgraded the Investor in the Wilderness blog to Wordpress. You can get there now by clicking the new domain name, www.zacharybass.com.

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The new site has many features that will make it much easier for you to find all the content on the blog. There's "Featured Stories," recent commenters, and categories. I hope you enjoy the new site. Please update your links.


Apple Ranked Number Two in BusinessWeek Study

Apple took the number two spot behind Amazon in BusinessWeek's annual InfoTech 100. The study ranks companies according to four criteria: return on equity, shareholder return and revenue growth, and weight-adjusted total revenues. Amazon claimed the top spot for the second year running, with RIM, Nintendo and Western Digital rounding out the top five spots. The study notes the growing absence of American innovators on the list, with US representation dropping from 43 to 33.

I have a little trouble with the inclusion of Amazon in this list. I guess one could argue that they do create gadgets, like the Kindle Wireless Reading Device. But their first business is online retail, not creating technology products. Therefore, in In my humble opinion, Apple tops this list.

The list is weighted entirely upon the aggregate scores of financial performance. It would be interesting to see the relative scoring used to rank the companies. Just how close was the race? And what would the list look like if it included innovative products? Apple would clearly top that list. Apple is number one in my book, but then I might be biased.

Wednesday, May 21, 2008

Apple Technical Analysis - Fed, Oil, and Fear

The Fed painted an ugly picture for the economy today, cutting growth estimates, and basically telling the markets that the rate cut cycle is over. The market sold off on the news, with the Dow down almost 250 points before rebounding a bit and ending at 12,601.19, down 227.49 (-1.77%). We got a double whammy with oil spiking nearly $4 to $135 a barrel, after the government reported a drop in gasoline inventories.

Would you believe me if I told you this is exactly what was needed? This will ratchet up the fear in a big way, evidenced by the put/call ratio moving as high as 1.35. In the process, we cleared out the negative divergences in the 60 minute charts and reset the oscillators. Fear is our friend.

In my previous analysis, I titled it Capital Preservation Time. That's because I felt a drop was imminent. So, hopefully you took heed and preserved capital when AAPL shot up in the morning. I had set the resistance at 188.70, it broke through that by a few points, it presented a logical sell point.

Also in this mornings analysis I had pointed to support at the twin 20s, the 20 day SMA and EMA, 180.70, and 179.20 respectively. I didn't think that AAPL would free fall through them both today. But it did, and ended under the 20 day EMA at 178.19 down 7.71 (4.15%). In the process it took out its uptrend support at 180 and change. AAPL had a great run, but it needed to deflate.

The S&P 500 lost its uptrend support at 1410, it now is left with its 50 day EMA. We have to expect things will settle out in the near term, perhaps some more selling, but advances are not likely. This is a good thing, as it will fully unwind the oscillators and kick the fear into high gear. We Bulls eat fear for lunch.

It's probably best to step away from your computer, take a breather and reflect. Not much to do here if your a Bull, other than to start planning your positions for when the market is ready to move. We're in a transitional phase right now, and so Capital Preservation is still the name of the game.

What Does Apple Have in Store for the 3G iPhone?

There's no bigger story on the Internet than the arrival of the 3G iPhone. Gizmodo reports that the launch date of June 9th has been confirmed by "very" reliable sources. The 3G iPhone will be introduced by Steve Jobs during his keynote at Apple's 2008 World Wide Developer's Conference (WWDC). Great! But most of us already knew that. Contrarians speculate that this date is bogus, because the phone hasn't been cleared by the FCC yet.

What about something we don't know like what features, other than AT&T's3G HSDPA networking, will come with the Jesus phone? Some of the things circulating the rumor mill include; Haptic interface, GPS with a kick-ass navigation application, monster battery, and a rainbow of color choices. Possibly the biggest draw, not necessarily a device feature, is a subsidized iPhone. The things we know will be include are the 2.0 version of the OS and a new SDK that 3rd party developers are using to create applications, that will be sold through the new App Store.

Well, all this hype might be setting us up for a real downer.Piper Jaffray’s Gene Munster advised investors on Tuesday to keep their expectations for the 3G iPhone “in check.” Gene thinks the iPhone will be practically unchanged from the current iPhone, in both look and features.

Could this be the reason Apple took such a pounding in the market today? AAPL finished the session down 7.71 ( 4.15%) to 178.64. Doubtful, when you consider the Fed minutes reporting a weakening economy and with oil surging to another all-time high, up $3.80 a barrel. All in all Apple's losses were on par or fared better than other tech darlings such as GOOG 549.99 28.61 (4.94%), BIDU 354.99 17.14 (4.61%), and RIMM 132.89 5.71 (4.12%).

Apple, Market Technical Analysis - Capital Preservation Time

More selling is likely in the near term as the markets continue to consolidate. On the flip side, the markets are getting very oversold. So, my recommendation is to be patient when when you have such opposing indicators.

Click on the image to see expand it to full size.

Apple is also in consolidation mode as the price is converging on it's uptrend. The uptrend line poses resistance at approximately 187.70, with good support at the 20 day SMA at 180.87 and the 20 day EMA at 179.52. I expect AAPL will test resistance today, let's see if it has the legs to turn it into support.

It wouldn't be prudent to take short positions here, because of the oversold indicators. And new longs are not apparent as well, we are in limbo. As pessimism ramps up, we need time to let things settle. Now is the time to sit on the sidelines and wait things out. Capital preservation time.

Monday, May 19, 2008

Apple, Market Technical Analysis - Battle for the 200

In order for this market to advance, the Bulls need to take control from the Bears by advancing both Nasdaq and the S&P 500 above their respective 200 day moving averages. This is historically the line of demarcation. When markets rise too quickly, they often fail at the 200. This time, it looked as the we might have a better shot.

The Naz had already captured the 200 day moving average last week, which was at 2417. And now it was time for the S&P 500 to follow suit and take control of its 200 DMA at 1327. And the S&P 500 made a valiant effort going into mid session, advancing all the way to 1440. The Bulls look like they had finally seized control of both markets.

Apple (AAPL) on the other hand was showing some weakness, advancing early then retreating. AAPL and the entire tech sector showed overall weakness, nothing specific, just profit taking after a good run up. AAPL finally got into sync with the indexes and topped out at nearly 189. But the Bears wouldn't be such push overs. The combination of overbought conditions and negative divergences on the 60 minute charts was too much to overcome.

Then the trading programs kicked in selling was triggered. Both indexes pulled back to just a sliver under their respective 200 DMAs nearly unchanged, the Naz settling at 2516.09 -12.46 (0.50%) and the S&P remaining above its previous close to 1426.63 +1.46 (0.09%). Apple's weakness on the other hand, magnified the pullback, and ended down at 183.60 -4.02 (2.14%).

The Bulls aren't done by any means. One would think if this market were in trouble, it would have failed badly. But that wasn't the case. Besides, it's normal for markets, after a good run, to lose some steam at the 200s. The longer term charts provide a rosier picture where bullish patterns are forming, suggesting the markets will move much higher. But first they need a little more selling, which would help reset the oscillators, provide a bit more consolidation and recharge the effort to move through the 200s with force, and put the Bears into hibernation.

The market internals provide supporting evidence that this move down was not so bad. For example there were far more new highs than lows on the NYSE, and more and more stocks are putting in new highs since this uptrend started several weeks ago. The other tell is that the volume of the selloff today was much less than the volume during the advances last week.

So if the selling continues, we need to take notice of what the support levels are below each market. If we violate those levels, then the story changes, and the 200s become much more difficult to breach. Look for support at the 200 and 50 day exponential moving averages (EMA). For AAPL, price support is in the 182-183 range.

Update, Support Levels: Tuesday, May 20 @ 10:46 AM

I wanted to note some support levels that traders should keep in mind as they navigate the markets over the next couple of days seeking out opportunities to take positions.

The S&P 500 has support at the up trend line at 1405, and it also has the 200 day EMA at 1407. If we fall below that, there's the 50 day EMA at 1383. The Naz 200 day EMA is at 2459 and the 50 day EMA at 2412.

The Dow 200 day EMA is at 12816 and the 50 day EMA at 12721. I don't particularly favor sighting the Dow, as it has less relevance to AAPL than the Naz and S&P 500.

Keep these levels in mind when considering a position. If we bounce off these levels, that may present an opportunity to take a position. But don't go wild here, I believe there's still some selling left in this market.