This Website Has Moved to www.zachbass.com

Announcing the Wilderness Investor Forums

2008-09-09T08:32:00.000-07:00

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.

Click the banner to go directly to the Wilderness Investor Forums.

Come join the discussion, where hundreds of investors and traders congregate to talk the Markets, Apple, Trading and Investment Strategies, Options, General Discussion, etc!

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

2008-05-23T21:30:00.000-07:00

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.

Click the banner to go directly to the new Investor in the Wilderness.

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.

-zach

Apple Ranked Number Two in BusinessWeek Study

2008-05-23T03:34:00.000-07:00

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.

Apple Technical Analysis - Fed, Oil, and Fear

2008-05-21T20:15:00.000-07:00

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?

2008-05-21T16:29:00.000-07:00

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

2008-05-21T06:22:00.000-07:00

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.

Apple, Market Technical Analysis - Battle for the 200

2008-05-19T20:57:00.000-07:00

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.

-zach

Sunday Morning at the Boylston Street Apple Store

2008-05-18T16:07:00.000-07:00

I'm not one fore crowds, that's why I passed on the grand opening of Apple's largest US store last Thursday. So, I decided to head on over this morning. And what a beautiful morning it was!

My buddy Jerry and I got there early because we thought the store hours were 8 AM to 11 PM, 7 days a week. That's true, except for Sundays, when they open up at 9 AM. So we took advantage of the time, went to Starbucks, and snapped off a couple of pictures of the store front. The facade is incredible, as it appears to be floating, suspended by several massive laminated glass beams that extend to the top of the building and over.

We walked around the corner to check out Tech Superstore. They were tucked away in typical Newbury Street style, they're obviously not the early birds that Apple is. If you recall a previous post, the founder and President of Tech, Michael Oh, was the guy who planted the T-shirt under the Apple Store foundation, and chronicled the building of the store on his blog Birth of an Apple Store, using time-lapsed photography.

So after we finished our Grandes the store was about to open, so we positioned ourselves in front of the doors to make sure we were the first ones to enter. A crowd started to form rather quickly gathering behind us. Upon entering the store, you are overwhelmed with this incredible glass column wrapped DNA style with a magnificent spiral glass staircase.

I went over to the stair case and peered straight up to the sky. I'm told that the roof has as lawn and garden. We weren't permitted to go up there just yet, maybe next time.

So, the first floor was all Macs. On the right were the desktops, in power order. First the Mac Minis, then the iMacs, and in the back of the store was the big iron, the Mac Pros. As you followed around to the left, there were the laptops, lined up in descending power order, from the 17 inch MacBook Pro in the back corner to the MacBooks near the front of the store. On the second floor are the iPods and iPhones flanked the sides, with every conceivable accessory for Macs, iPods and iPhones along the back.

On the third floor was the Genius Bar, one-on-one stations, software and books. There's an elevator next to the Genius bar so you don't have to haul your Mac up the stairs. Boy, these guys think of everything.

I snapped this picture of the floating Apple logo, and caught the entrance to the Prudential Center across the street. We spent a fair amount of time speaking with the employees and managers, and marveled at the simplicity and elegance of the store layout. Well, that was that, both Jerry and I had to leave prematurely, because we both had Sunday morning kids sporting events to attend. It was one of the few times I have left a Mac store empty handed.

Apple Planning Massive Rollout of 3G iPhone, SDK 2.0

2008-05-17T23:01:00.000-07:00

I'm surprised that Apple's recent barrage of deals among carriers around the world has not gathered more notice. It appears that the impact of the new SDK, App Store and the 3G iPhone will be bigger than anyone is prepared for, I believe it will be disruptive, seminal, historic.

Look at the deals that have been put together in just a few short weeks, it's dizzying. The iPhone is currently in the US and 3 countries of Europe, by the end of the summer it appears Apple will be operating on every continent in a total of 46 countries!

The potential market in with current operations is approximately 150 million. With the new deals Apple has sealed, they have increased their potential market to nearly 600 million! Currently the iPhone enjoys a 3% penetration into the markets in which it is being sold, or about 4.7 million iPhones. If you project that out, we may be talking over 18 million iPhones by the end of this year! We haven't even talked about China Mobile and India's Bharti Airtel yet! They should account for another 500 million potential buyers alone!

You may look at that and think at first glance, that's pretty good growth. Think about this for a moment, this has to be conservative, we're assuming static penetration of 3%. The rate of market share will increase as well, especially when you consider the attention Apple will get at the Beijing Olympics. I believe Apple has a plan to leverage the Olympics in coordination with this global rollout, to make an impact that will eclipse the Super Bowl ad of 1984.

Let's assume Apple will increase their market penetration by 50%. I believe this is conservative. That would translate to another 9 million phones by the end of this year, for a total of nearly 27 million phones by the end of 2008. So, Apple put out the number 10 million in 2008. Zach's prediction? 20 million. Are we witnessing another Black Swan?

Zach's Asset Allocation Strategy

2008-05-15T18:00:00.000-07:00

It's impossible to conjure up a generic asset allocation strategy for someone without knowing their tolerance and capacity for risk, their short and long term goals, and the time they have to dedicate to managing their money. So I'm not going to try to do that. Instead, I'm going to describe my strategy of asset allocation and you decide if that might work for you.

My strategy is partly based on my fundamental investment philosophy that states, preservation of capital comes first, achieving maximum profits second. It's also based on a variant of a strategy described in the book "The Black Swan: The Impact of the Highly Improbable." It's a New York Times best seller, written by Nassim Nicholas Taleb.

A Black Swan is a highly improbable event that has three characteristics: It is unpredictable, it has incredible impact, and after it happens we invent a reason for it that makes it seem less probable. The success of Apple, with the return of Steve Jobs was a black swan; as was 911. According to Taleb, black swans are endemic throughout our world.

Taleb describes a strategy for investing that relies on this principle. And that's to take 90% of your assets and put them in the most conservative investment vehicles possible (treasuries, bonds, etc.), then take the remaining 10% and invest small portions into a number of extremely risky stocks or ventures. And then let the black swan emerge. Of course there's a chance you may never hit the jackpot, but you won't lose anything either.

Well, that's a bit extreme for me. While I want to maximize the potential to grow my assets, I need to balance that with protecting what I've managed to save for retirement. So, I've simply tweaked Taleb's allocation between the conservative and risky investment piles, and taken a more traditional approach of diversification within each pile. My allocation percentage is 80% conservative, 20% speculative.

Yup, the old 80/20 rule. Also known as the Pareto principle, which states that for many events, 80% of the effects come from 20% of the causes. Just like in business, 80% of the sales persons comes from 20% of the clients. Well, in my portfolio, 80% of my growth will come from 20% of the assets.

The conservative portion of my portfolio is invested in a mix of index funds, EFTs, treasuries, and real estate. The securities sit in a retirement account, for me that's a SEP IRA. I've chosen the mix of funds based on my risk profile. The plan is that as I get closer to retirement, I'll re-allocate the securities into more conservative choices. This generally means buying into a greater percentage of treasuries.

In my speculative portfolio I trade stocks through a brokerage account. I use margin to some degree, when the risk-reward ratio is favorable, but for the most part I limit positions to the available funds in the account. My goal is to diversify the investments in this account, but not to the detriment of making profit. My trading style is to take profits quickly, and when this account grows bigger than my 20% allotment, I move the excess into the IRA.

Now this brokerage account requires a significant amount of effort because I swing trade. So, the technical analysis required to manage the trades and mine opportunities can be significant. But I do it because I'm good at it and it's fun. Besides, it provides me with an endless number of subjects to write about in this blog.

Pre 3G, Apple (AAPL) Technical Analysis

2008-05-15T02:56:00.000-07:00

Many wonder if the expected 3G iPhone has been baked into Apple's price. I'l have to say no. Apple has regained all this ground on the basis of their fundamentals and outstanding Mac sales, not the expectations of the new Jesus phone. I believe 200 is the correct price sans the 3G iPhone. The new iPhone, along with all the recent world-wide carrier deals, should bring Apple much higher.

Now for a technical analysis of a critical battle for both Apple and the Nasdaq (Naz), the 200 Day Moving Average (DMA).

Yesterday Apple (AAPL) led the Nasdaq with an initial charge at the 200 Day front. And although this isn't Apple's fight, as their 200 DMA is well behind them, Apple and the Naz share common interest in advancing through this level. For Apple it's strong price resistance, a remnant from a discouraging battle lost back in early January, which led to the infamous slide to 115.

This was the Naz's first try at a break through the 200 (2517 for the Naz), and first attempts at 200 DMAs rarely succeed. Apple has been a powerful force lately, but couldn't provide very good front line blocking this day because it had its own demons to contend with, being severely overbought (RSI >70) and strong price resistance in the 192-193 range. And don't forget, the Bears have a lot of skin in this game, they realize that a break through the 200 would be a major victory for the Bulls and will result in a surge of confidence that the Bears may have no defense in the near term.

As the day wore on, the Naz looked like it might do it, as it had climbed all the way to a high of 2528, with pretty good volume. But the Naz couldn't pull away from the 200, as the gravitational forces were too strong. By early afternoon "Big Guy Sell Time" was upon us, that's when all the Movers and makers (MMs) come back from lunch (approximately 1:35 PM). They had seen enough, yanked their toys from the sand box and went home.

AAPL led the "Big Guy" selloff, the rest of the Nasdaq soon followed

AAPL and the Naz both plunged for the remainder of the session, until they both landed on their respective support levels. For AAPL, that's the 186-187 range (established last week), and for the Naz it's 2500. The 2500 level had previously been strong resistance for the Naz over the past 8 trading sessions, but with today's break through it has flipped to become solid support.

So, will today be they day the 200 DMA falls? Or, will the Naz and Apple regroup, recharge their batteries, and put together a collective surge tomorrow? Truth be told, I'd rather go into the weekend with the Naz breaking though the 200 DMA of 2517, and close well above it, and for AAPL to also break through it's resistance range of 192-193 and close well above that. This would convert these levels from resistance to support. From there, we can continue the advance.

Tech Superpowers Buries Treasure Under Apple Store

2008-05-14T13:15:00.000-07:00

I reported earlier this week about Apple's largest store to date, will be opening this Thursday at 6 PM, on Boylston Street in Boston. There's been a lot of speculation about what else might be announced along side the opening. Some wondered if the new 3G iPhone might be launched. Fat chance, considering the opportunity that would be lost for Steve Jobs to mesmerize the media at the Apple World Wide Developer's Conference (WWDC) in June.

But this story just came across Andy Ihnatko's Twitter stream (I received it on my iPhone). Apparently a neighbor of the new Apple Store, the long-time resident business, Tech Superpower Store's founder and President Michael Oh, says that he buried one of his company's T-shirts under the concrete of the Apple store. This all happened about the same time the construction worker buried the David Ortiz shirt under the new Yankee Stadium. If you're a Red Sox fan like me (have been since my first breath), then you can appreciate the gesture.

"We're doing it with a wink ... We are in business because of the great things Apple has done ... This T-shirt in the sidewalk is a symbol that there's a connection between the two sides of the alley."

Michael is the one who took the time-lapsed photography of the store's construction progress and published on the Birth of an Apple Store blog. I wonder if Big Papi is a Mac user?

Store Opening Update - Thursday, May 15 @ 9:45 AM EST

The new Boston Apple Store has been revealed to special guests and the Boston Globe. The green Monster facade has been removed to reveal a glass front!

The first three floors are retail, with a spiral glass staircase that ascends to the third-level "Genius Bar". macs are on the first floor, iPods are on the second.

Yesterday Ron Johnson, Senior Vice President of Apple Retail was there to speak to guests, including Boston's Mayor Thomas Menino, and the media. I also heard a rumor that Steve Jobs was in town. Although there's no confirmation of this.

Federal Express, Market Outlook

2008-05-12T21:10:00.000-07:00

Fedex was an interesting story today. It had been falling all last week prior to earnings. But this morning Fedex futures didn't budge (a clue). This morning it gapped down 3 points, then rallied nearly 5% to end slightly positive. It appears the MMs where profits, and fixed the price prior to earnings, thus earnings was a non event to the MMs. The day traders and smaller investors on the other hand were pawns in this scheme, they jumped in this morning going after a great short opportunity on the gap down. Little did they know, it was a Big Boy trap, as the MMs covered to meet Friday's close. Man these MMs are sneaky bastards!

Back to the Naz. It did pretty well today, albeit on fairly light volume, at least this up volume was slightly better than Friday's down volume (meaning today's Bulls had more strength than Friday's Bears). The Naz moved past resistance at 2450, and closed near it's high at 2488.49 +42.97 (+1.76% ), stopping at it's long-term down trend line. It still has the 200 day moving average to contend with at 2517. And if it takes that out, then there's the gap resistance at 2575, set back on January 6.

AAPL followed suit with a nice gain, but on very low volume. It hit resistance at 188.75 and closed at 188.16 +4.71 (+2.57% ), very close to where it ran into resistance last Wednesday when it went all the way down to 180 intraday. If you took profits at 188 or so I wouldn't blame you, I did at 187.70. I should note that AAPL is extremely overbought right now with the RSI at 72.65, but AAPL has shown in the past it can live in the stratosphere for weeks.

So, here's the lowdown. I believe the markets are going to try and rally Tuesday, because it would seem that's where the MMs want to take it right now. But if it starts up on little volume, I would be suspect. If it starts with good volume, it's probably the real deal. We would be looking for the Naz to clear 2517 (the 200 day MA). If it does that, then we're in no-mans land to the gap down. If we get there, that will be a new plateau from which we can look at some new positions. In the mean time, I recommend taking it slow.

Apple Store Boylston Street, Boston Opening This Week

2008-05-12T07:18:00.000-07:00

Apple published that the store will open this Thursday at 6 PM. I've been following the construction since last year through timelapsed photography on the Birth of an Apple Store blog. This is Apple's biggest store in the United States with roughly 20,000 square feet of space. I don't think that's all retail space though. The facade is a replica of Fenway Park's Green Monster! The store is located across the street from one of Boston's landmark buildings, the Prudential.

Apple had originally considered keeping the store open 24 hours a day, seven days a week. If you know Boston, that would not have been practical, as the sidewalks get rolled up around 11 PM. So that distinction will stay unique to the New York City 5th Avenue Store. Instead, it will be open from 8 AM till 11 PM, 7 days a week. So, when my home store in the Braintree South Shore Plaza is closed, I can get my Sunday morning fix with a trip into the Hub of the Universe.

Happy Mother's Day Mrs Bass

2008-05-11T19:29:00.000-07:00

Usually we head out to Martha's Vineyard for Mother's Day and make it a two-for with my daughter's birthday being only a few days from M-Day. But this year it was not to be, due to scheduling conflicts. So, instead we headed down to Rexham Beach in Marshfield, brought Gyasi the Ridgeback, and walked the beach. It was a beautiful day, even if slightly on the cool side. The pictures were taken with my iPhone, of course, slightly enhanced with iPhoto.

The surf was up, must be the remnants from the storm we experienced the past couple of days. A lot of people were out repair damage to their sea walls. We took a leisurely walk, found some choice sea glass, including this rare find, a prized cobalt piece.

We love collecting sea glass, so much so, we once commissioned Vineyard artist Marjorie Mason, to depict our summer morning ritual on Lamberts Cove, Martha's Vineyard, near Split Rock. That's me throwing stones into the crack of split rock. Marjorie is incredibly talented, her paintings are oil monotypes. She actually paints them backwards on a metal plate, then performs a one-time press onto canvas.

My eldest spent the entire walk on her iPhone SMS'ing her friend Dylan, my youngest was underdressed and chilly so she wrapped herself in a very fashionable sea shell print blanket, that Gyasi the Ridgeback used for comfort in the back of the SUV on the ride over.

The storm had carpeted most of the beach with smooth stones. I thought this shot was interesting, it captures my penchant for contrast and my Zen nature for simplicity and balance. Happy Mothers Day.

Dell PC Orphaned at Apple Store Genius Bar

2008-05-11T19:08:00.000-07:00

I was at the Genius Bar in the South Shore Plaza Apple Store, in Braintree Ma, waiting to get a stuck latch on my PowerBook unstuck. And there was this Dell PC just sitting there, for quite a while, at least for the 1/2 hour I was in the store. There wasn't anyone within range that appeared to be associated with it. Perhaps the owner was embarrassed and kept a comfortable non-discrete distance, fearing jeers or ridicule?

I felt sorry for the poor gray box, being treated like the black sheep of the family. Or, maybe it was a covert undercover spy pod, with a hidden camera and microphone. All I know is that it couldn't have looked more out of place, among all those sleek aluminum PowerBooks and T-shirt wearing geniuses. Speaking of T-shirts, the store employees had a much wider variety of colors and slogans that I hadn't seen before.

This Leg of the Trip is Over, Let's Gas Up

2008-05-09T07:06:00.000-07:00

I reported yesterday morning to my Google Group that I thought the markets may retract a bit for the next few days, and that seems to be bearing out (no pun intended).

If you're a chartist, check out the MACD on any of the major indexes, as it is shifting direction downward, this is the supply/demand trend in transition. This will aid in resetting the oscillators like the RSI and Stokes, and ratchet up the pessimism a bit.

AIG is going to help this transition along by reporting much worse than expected news, probably stopping the financials resurgence dead in their tracks. How does a company raise dividends when they know their write downs are exploding? On the flip side, retail is rising against the tide, interesting.

The Naz should be the benefactor of good support in the 2390-2400 range. I think we'll see some more selling today and into Monday, this will be a weight on AAPL going higher. So I would consider trimming positions on strength. That doesn't mean take everything off the table.

If you want to preserve capital, then preserve capital, if you are more of a risk player or much longer term and can weather the dips, then do that. The fact is, that the Bears have the upper hand on the Bulls right now, and expect them to exercise their will. I'm personally holding my AAPL position, if there's an intra-day move towards resistance, which appears to be at 188, then you might consider locking in profits.

Apple Investor's Beijing Olympics

2008-05-08T10:06:00.000-07:00

I reported in a previous article, that China, along with several other countries around the world, will be getting the 3G iPhone this year. Well it appears that it may happen sooner than anyone thought. According to China Tech News, Apple (AAPL) has chosen Beijing's Sanlitun area to open a 3,000 square meter store. And knowing Apple, there will undoubtedly be heavy use of Apple and iPhone imagery during broadcasts of olympic events.

The Wilderness Triathlon
In the spirit of the upcoming Beijing Olympics, I've held a special event that spotlights three very useful, and free online resources for investors. And the winners are:

Bronze: The first category is economic news; and the medal goes to CNN Money. As a general information site they're pretty good. Where I think they excel is in their futures or pre-market reports, and their economic calendar of events, where I can see that day, or the entire week's scheduled events at a glance. I can even drill down and find useful information on each event. These are the first two web pages I visit in the morning.

Silver: The second category is charting; and with the silver medal is, StockCharts.com. hands down, StockCharts has the best charts on the web, and it's free for the 15 minute delayed quote. With a subscription you can get real-time quotes. This site is not just about charts, but there is also educational material in the "Chart School" and a market summary feature where you can see all the indexes at a glance, allowing you to easily drill down to several different kinds of charts. You can also annotate the charts with a Java-based chart tool and publish the link to your annotated chart.

Gold: The final category is Apple Investor research; and for sheer completeness and simplicity, the top honors goes to Apple Investor News. This site scours the Internet every 15 minutes, and using sophisticated algorithms, it finds stories and organizes them by category and type. The website presents them in such a way, that at a glance I can see dozens of stories and quickly find one of interest. Just click on the link and I'm at the originating website.

Apple and Markets Take a Break

2008-05-08T06:21:00.000-07:00

Yesterday was a day of unwinding. The RSI and Stochastics were peaking for days (70s, 80-100 respectively) on what seemed like an endorphin induced high. Investors were looking for just about any reason to take things down. You could point to any number of reasons for yesterday's decline; oil, housing market, consumer spending - any one could have been the catalyst.

So, today you can probably expect a slight advance, or rebound, to balance yesterdays pullback. Especially with stronger companies like Apple (AAPL), but I expect the next few days to be flat to slightly down while selling continues. The good news is that selling pressure has largely resided, and pessimism is peaking.

Huh? Pessimism peaking is a good thing?

Yes, especially if you're a perma-bull. When pessimism peaks, the supply/demand equation is usually poised to flip. It's a contrarian bullish signal. But don't get all giddy, because one day of selling doesn't wipe away a week or two of optimistic buying, it might take a few days. The good thing is that our floor of support is now higher than it was two weeks ago.

Speaking of support, we have a confluence of support indicators on the Naz at 2377, with the 50 day EMA, our neckline price support from the inverse head and shoulders, and the long term downtrend line. Also, for you candlestick chartists out there, yesterdays action formed a bearish engulfing candle, usually indicating a bearish reversal. I think it will be short-lived, expect good support at the 2390-2400 range.

So, as of this writing (9:20 EST) AAPL is trading up in the pre-market about a dollar, and futures are flat to slightly up. We'll probably see AAPL open slightly above yesterdays' close, and the action in the first 45 minutes will likely determine the rest of the day's trend.

As I said yesterday, this dip represents a buying opportunity, although I think the prime time was yesterday afternoon. Buying here or above does not provide a sufficient risk:reward, in my opinion. Unless of course, it drops below 181, then AAPL looks more attractive. This is one of those days, where you don't want to get too forceful, let the market play out. Less is more.

Where in the World is 3G iPhone, O

2008-05-07T04:28:00.000-07:00

Apple inked a deal with Vodafone to bring the 3G iPhone to Australia, New Zealand, the Czech Republic, Egypt, Greece, Italy, India, Portugal, South Africa and Turkey! Also, this year Rogers Communications of Canada says they'll be joining the world wide club, as well as Mexican wireless carrier America Movil said they will be selling the 3G iPhone in Mexico and South America.

Apple broke their monogamy business model of one carrier-one country, by marrying Vodafone and Telecom Italia to Italy. We should have listened back in February, when Tim Cook declared that Apple was not married to the single-carrier business model at a Goldman Sachs Investment Symposium.

On the home front, the 3G iPhone seems imminent for a mid June release. You gotta think that if your boss tells you to nix any vacation plans, something big is up, right? In a memo to employees, AT&T Mobility said they wanted all hands on deck between June 15 and July 15. The memo attempted to motivate employees stating, "We’ll meet the challenge head-on by providing an exciting Summer Promotional Launch to enable your sales to soar." That should make up for the lost vacation.

And to add gravitas of the expected timing, Apple holds it's Worldwide Developers Conference from June 9 to June 13. As in past WWDC events, Steve Jobs is expected to invoke the reality distortion field with a key note speech, probably on Friday the 9th, in order to let the news bake in over the weekend.

The 3G iPhone, as it's name implies, will connect to the much faster 3G network, making web access a much better user experience. And what would this story be without rumors of other expected improvements like a sleek black anodized finish, a better camera, perhaps even video. And the icing on the cake, new firmware support for Chinese handwriting recognition. Can we add China to the worldly list too?

Shaw Wu, AmTech's Dr. Jekyll and Mr Hyde

2008-05-05T18:23:00.000-07:00

Shaw Wu, an analyst with American Technology Research, has historically been one of the most bullish Apple analysts. That's why everyone was shocked when he had a reversal of character, and cut his rating from Buy to Hold and lowered his price target just before Apple reported their Q2 earnings on April 23rd. And he did this against a rising tide of optimism from other analysts. Now, just six weeks later, he's doing a 180 degree turnaround. He raised Apple stock to a Buy, and set a price target of $210 per share!

In a research note, Wu did his best song and dance to cover his schizophrenic prognostications by saying, [they] "overestimated the potential negative reaction on the quarter," adding that Apple will likely remain "extremely volatile despite being universally loved." Then he tossed some incoherent hypothesis that a "product vacuum" between now, and whenever Apple releases new product, might put a dent in sales.

So, then just to keep readers off balance, Wu reverted back from Mr. Hyde to Dr Jekyl and listed all the wonderful new products we can expect from Apple in the coming months. Like the 3G iPhone, expected to be announced in June, and "a radical redesign of [the] MacBook and MacBook Pro" laptops. He also pointed to the accelerating growth of Apple's PC market share. Then to make sure that his transformation was complete, Wu said he was confident that Apple would reach their 10 million iPhone goal by the end of the year.

We need analysts that analyze objectively, that report on fundamentals and facts, not what they see in a crystal ball. We don't need analysts that let their emotions rule their predictions, especially when they downgrade or upgrade a company. Stock holders must be able to rely on an analyst doing their job with professionalism and objectivity. Makes me wonder if Shaw Wu had one too many lunches with Toni Sacconaghi.

Is Microsoft Yahoo Serious?

2008-05-04T08:39:00.000-07:00

Was there ever a time when Microsoft was a cool company? Cool isn't the right word, perhaps necessary or mainstream are better descriptors. Didn't Yahoo used to be cool? It was for a time, when they built their empire making it easy for average people to have their own web presence with a homepage. Yahoo seems to have lost that coolness factor, although they are trying to recapture it, and they don't need Microsoft to do it.

So, does an alliance between Microsoft, a "necessary" company, and Yahoo, a "used-to-be" company, make for a really cool company? Let's face it, Apple is cool incarnate, and Google is cool doing no evil. Certainly can't say that about Microsoft. Would an alliance between Apple and Google be cool? Duh! They're doing it now, and cleaning Microsoft's clock.

So, why did Microsoft walk away from their negotiations with Yahoo? From the reports, it seems Monkey Boy, Steve Balmer, thought the deal was too pricey. What's the price one must pay to obtain coolness? Apparently there's no price that can make this deal cool.

Remember the actor Yahoo Serious? He made a movie that developed a kind of cult following, called "Young Einstein." The movie was a really funny parody of Albert Einstein as a young man. Yahoo Serious knew how to portray Albert Einstein as cool. Now let me ask you, can the video below, in any way, put Microsoft back in the cool light? C'mon, seriously!

Safari on Windows Market Share Exploding

2008-05-03T05:29:00.000-07:00

Riding on the tails of iTunes and iPhones, Apple’s Internet browser called Safari has tripled its market share on Windows. Ever since Apple slipped Safari under the radar of unsuspecting Windows users, back on March 18th, Safari on Windows has tripled.

If you own an iPod, iTouch or iPhone, but don’t own a Mac, there’s little doubt that you have iTunes installed on your Windows PC. You need iTunes to register your iPhone, and all iPods, would be nothing more than pretty mp3 players without it.

And as a Windows user with iTunes, you’ve become accustomed to Apple’s Software Update program popping up every once in a while informing you of important updates to iTunes and the underlying media player QuickTime. So, you would dutifully click OK, and let the updater do its good work, installing new features, bug fixes, and security updates. This time, the Safari browser was included in the mix.

This little stunt was clouded in controversy at the time, as many Windows hawks called this unethical and tantamount to installing a Trojan horse or virus. Of course these claims are absurd, but Windows users, who are regularly plagued with maladies like viruses and Phishing software, are particularly sensitive to such things. Unlike Mac users, who have no idea what the problem is, because we don’t get viruses and all that other bad stuff.

Apple listened to the complaints, even from Mozilla Foundation's CEO John Lilly in his blog, but they didn’t remove Safari from the updater. Instead, they made it easy for the user to choose to remove Safari in the update. It’s widely thought that most of the people that complained were either Microsoft sycophants or Firefox groupies.

The stunt has apparently paid off in a big way. People are checking out Safari as an alternative to their Firefox browser and Internet Explorer, and they like it, a lot. It’s no wonder, with Apple’s legendary flair for making their products attractive and easy to use. As it turns out, Safari simply provides a much better user experience than the other browsers. Can Safari eclipse Firefox as the Windows alternative to Internet Explorer? I think so, as Apple slowly penetrates the non-Mac user ethos, and infects them with a viral movement

Buy The Market, Buy AAPL!

2008-05-02T16:44:00.000-07:00

All the pieces are in place to continue this breakout. The Jobs report this morning was much better than expected, only 20,000 fewer jobs, compared to the consensus of 80,000. That's a HUGE difference and great news. Who are these analysts anyways? How could they be that far off?

This confirms it, buy the market. What are the best places to be? Well the best performers right now are the retail, financial, and technology sectors. And that's where the big money is going as well.

Today's action was very healthy, with a slight sell of, all the oscillators have unwound (RSI, Stochastics). This has provided breathing room for buyers next week.

There were some good buys today, as Apple (AAPL) bounced off support, if you were nimble, you could have picked it up at a good price. This stock is hot, and most analysts believe, as do I, that it will easily reach 200 again, and soon. Google (GOOG) also retracted a bit, ditto with Research in Motion (RIMM). All are at very attractive prices right now and excellent upside potential.

I'm Free! And Freedom Tastes of Reality!

2008-05-02T04:33:00.000-07:00

Who would have thunk the market would break free with such vengeance as it did yesterday? The Bulls launched the Nasdaq to highs it hasn't seen in a long time, breaking through the long-term downtrend, and in a very big way. So now, the resistance that we've been fighting for the past weeks (2430 on the Naz) is now huge support.

Now for a word of caution before you get too giddy. This is a strong buying signal, however, that doesn't mean the market is going to shoot to the moon. Oh no! In fact, you can expect it to test that support, how else will the market know it's for real? So, before you start spending like a drunken sailor (no offense to drunken sailors), look before you leap.

As the market was rising yesterday, and I sat in stunned silence, I was trying to make sense of it. Normally on breakouts, you get volume shooting through the roof. But that wasn't so. I always preach that the key indicators for determining future directions are a confluence of price, volume, and momentum. Volume was pretty good overall, but in some corners it didn't quite jive. Look at AAPL, it rose 3%, but on 10 million fewer shares than on average. It was the same story in all corners of the market.

Weird? Well not so weird. There is one other indicator that you've probably seen if you're the parent of a child with a stubborn fixation on something. That is sentiment. The market simply said, I've had my eye on that cookie jar for so long, and every time I reach for it, you slap my hand. Well, no more Mom, those cookies are mine, and there's nothing you can do about it! So, we took the cookies. Let's hope we don't over indulge ourselves. Ever eat a whole package of cookies? Later you pay for it, in a most unpleasant way.

So, now for the technical details. On the Naz, advancers led decliners 20 to 9, and volume on those advancers relative to decliners was very good, on very good overall volume of 2.3 billion shares. In other words, Advancers tipped the scales like a one ton Bull, while the Decliners were vying for a Biggest Loser bear hug. This is confirmation of a breakout in my book. Let's hope we can maintain it.

The Morning After

2008-05-01T04:25:00.000-07:00

Futures are down this morning, but not severely. GM looks up, but that's to be expected after their upbeat earnings report. Apple will likely open a little higher this morning. There seems to be an upswell of small investors that want it higher, while big money is sitting on the sidelines.

The Fed gave the market exactly what they wanted, A small rate cut and a neutral stance going forward. But even so, the market sold the news, with the Dow losing 117 points in 5 minutes, and AAPL dropping a bit over 2%. AAPL recovered some in after hours trading. The Dow had briefly touched 13,000. That's a level that hasn't been seen for a while!

The Naz was poised to break out of critical resistance at 2430, the long term downtrend line. But the selloff squashed any hope of achieving that. And I'm not sure we'll see it happen this week. The market needs to find it's footing here, digest what the Fed said, and fend off a slew of market reports today, including Jobless claims (tomorrow is non-farm Payrolls).

I can't see taking any longs today, no clear entry points.

Subsidized 3G iPhone in the United States?

2008-04-30T10:10:00.000-07:00

There's a story by Fortune that AT&T is going to cut the price of the 3G iPhone by $200 when it's introduced this summer. That would make the iPhone more attractive to a larger audience. The story says that a 2 year contract would still be required. So, that means an 8 GB 3G iPhone could be had for as little as $199!

In France, Apple is pressuring Orange, the exclusive carrier there, to subsidize the iPhone to spur lagging sales. But there may be some difficulties getting around french anti-competitive laws. In Italy, they've managed to strong arm Apple into letting. The UK and Germany already offer steep discounts on the iPhone, with Germany's T-Mobile offering a tiered subsidy plan.

Ireland's O2 has no such subsidy plans. In fact a spokesperson for O2 Ireland, has said, in not so many word, that they plan to stick it to customers because O2 believes that Apple fanatics will buy it at any price. Pat Phelan, CEO of Irish telecoms Cubic Telecom, says this two tier pricing scheme amounts to a tax, he calls the Paddy Tax 2.

And finally, it looks like Apple has worked out a deal with Rogers and our neighbors to the north in Canada. Rogers can support both the current Edge network as well as 3G. They'll likely see the iPhone there very soon. No word on subsidies. We just might get a flood of Yukes coming down here to smuggle the little beauties across the border, eh.

Hey Ben, We're in a Tight Spot

2008-04-30T05:33:00.001-07:00

Last night I got to thinking about the Fed's announcement today. By the way, Ben and company speak at 2:15 PM EST. And after a little what if analysis, I came to the conclusion that these guys are are in a tight spot. Think about it; the market wants Ben and company to cut rates by 25 basis points, but more importantly, they want to hear that the Fed is going to be a hawk on inflation going forward.

Now, if they cut 25 points, I believe the market is going to sell the news. The dollar will remain weak, and inflation will ramble on. Man, the prices at the pump, and at that food market are really putting pressure on the consumer.

If the fed cut's 50 basis points, will that help the market? Sure the housing market will like that, but it may completely destroy the dollar. And with the dollar tied to oil, this may reverse it's recent decline, and launch the cost of delivering products to consumers. It may help exports, but you can't devalue the dollar to get us out of this predicament. The market will be stunned at first, realize the predicament and sell off.

If they don't cut at all, then the message will be that we've got runaway inflation. Nobody will take that news kindly, and the market will sell off. Man, we're in a tight spot!

Hey Ben, Do the Right Thing

2008-04-29T04:12:00.000-07:00

Ben and friends report on Wednesday whether or not they will continue cutting Federal Reserve rates. The buzz is, or at least the hope is, that the cutting will come to a stop. Most expect a 25 basis point cut, and a declaration from Ben that cutting may slow down or come to an end to keep inflation in check. Come on Ben, "Do the Right Thing!"

The thing about the market is, that it's all about meeting expectations. If the market doesn't get what it wants, then it will likely sell off. So, unless there's some grim and dark thing hiding in a dark recess, something only Ben sees, it's time to move from solving liquidity in the money supply and tend to curbing inflation.

Until the Fed reports on Wednesday (2:15 PM EST) expect big money to be taking it easy. This was evident in yesterday's low volume, and I expect that to be the case today as neither side is willing to take a stand. There's no sense in committing one way or the other until the near term becomes more clear. From a trader's perspective, this should be a time to reflect and not get too aggressive.

I observed recently that the big money seemed to be rotating sectors from commodities to financials, and that observation is becoming more clear each day. So gold and agriculture are feeling that shift, and the rising dollar should put pressure on oil to come down as well. If oil and the dollar continue this way, then we'll have a good chance to break through the down trend in a significant way, as I mentioned in a previous post.

What do you think the Fed should do?

How to Make $10,000 in 37 Days

2008-04-28T19:33:00.001-07:00

No, I'm not talking about playing the market, but I do have a great tip. I've been researching how to best market Investor in the Wilderness. So I thought the best way to market my blog was to see what other successful bloggers are doing. I'm very fond of saying, if you want to be successful, do what the successful people are doing.

So, I scoured the Internet to discover who were the most successful bloggers out there, when I cam across John Chow dot com. John's blog is a lot of fun with a great community, he receives over 300,000 page views per month, with over 150,000 unique viewers! Better yet, John has a free guide you can download that explains in detail how to run a successful blog, and how to best monetize it. He makes over $30,000 every month, wow!

Yesterday, John posted about this guy Brian Campbell, an Internet Marketing Professional, who claimed that he could show you how to Make $10,000 in 37 days, starting from scratch, using Facebook. So, I decided to check it out and join Brian's Facebook group Internet Marketing University on Facebook and see if he's for real.

I recently setup a Zach Bass Facebook account, but I'm pretty to new to it. By the way, if you have a Facebook account, look me up, let's become friends. So, I thought this would be a great opportunity to see if I could learn a thing or two about using Facebook's networking features to expand my readership. I've read Brian's materials and watched his video, and I have to say that I'm intrigued and I'm going to follow along with Brian's instruction. Stay tuned!

Mission Today, Compromise Long-term Down Trend

2008-04-28T05:54:00.000-07:00

Our mission today, should we except it, is to take out the declining ling-term trend on the Naz. The target... 2430. And you have support my friends at 2385. Should you accomplish this objective, it would be very Bullish, very bullish indeed. The financials led this charge last week, as I pointed out in my previous post with Goldman Sachs (GS).

You have additional support in the monthly oscillators, those things that go up and down bordering our price charts, have unwound and ready to ascend. They show we are oversold, and the MACDs are near the horizon. This will provide the necessary breathing room we need to meet this goal.

You might think that a break out here will be a clear signal to go long. But not so fast, we have our friends the Fed reporting on Wednesday. Many think The Fed is poised to put the brakes on their cutting trend, with a 25 basis points, or none at all. And that an announcement will be made that inflation must be kept in check. This is what must be done, and this is what the market needs to hear. So come on Ben, show us your leadership. What do you think, is this the end of the rate cut cycle?

Recapping the Ecosphere Earnings Storm, Skies are Clearing

2008-04-26T14:35:00.000-07:00

Like a hurricane, the lull before the earnings storm of Apple Ecosphere stocks masked its true intensity. Research in Motion (RIM) was well ahead of the storms leading edge, reporting pretty good numbers and upbeat guidance, it provided some wind under the sails of the tech sector, including Apple (AAPL).

About 2 weeks later the chip warriors, Intel (INTC) and Advanced Micro (AMD), presented the next wave. Both taped up their windows, and braced for impact by revising expectations, INTC lowering their gross margin a bit, and AMD taking an extreme stance, revising their revenues down a whopping 15 percent!

After reporting, Intel fared pretty well, coming short of last years numbers, but better than most expected. The result was a 6 percent rise Intel's stock price the following day. It was a silver lining to the winds ahead. AMD followed up with it a dark and grizzly wave, a huge loss in revenue and significantly lowered earnings. But there was no love lost, as the market dismissed it with optimism of AMDs plans for reconstruction. The difference today is that AMD remains under its 20 and 50 day moving averages, where INTC has risen above and creating separation.

After a surge of bad economic reports, the eye of the storm was upon us with Google (GOOG) and Apple (AAP). And GOOG brought clearing skies, the sun shone and the markets felt relieved. Next was Apple, at first glance, they had blowout numbers, but provided ultra conservative guidance. But as anyone along the east coast of the United States knows, the worst was yet to come after the eye has passed.

Mid week last week, volatility in the market started to whip up, as we were deluged with earnings reports. Surprisingly the storm seems to have subsided, as most of the reports were not nearly as bad as expected. And there's been a sea change, as big money decided that sector rotation from commodities to financials was necessary, with Goldman Sachs (GS) benefitting with a breakout from their downtrend. On the commodity side, Gold and Silver have taken a big hit, and agriculture is moving sharply off its highs.

So, now we have the Fed in front of us, and it looks like their rate cut cycle may be coming to an end to curb inflation. There are positive divergences setting up in the major indexes, which should help start an uptrend. Overall, things are looking up for GOOG, RIMM and AAPL, now that the storm has cleared.

What is your opinion, do you think we are poised for an uptrend? Write your comments below.

-zach bass

Commodities are Dead, Long Live Commodities

2008-04-25T03:12:00.000-07:00

Commodities have taken a one two punch off their highs. Take for example the Morgan Stanley Commodity Related Equity Index (CRX), it has dropped nearly 5% off the top of its high, and similarly Potash (POT) down over 10% the past two days, even the AMEX Oil Index (XOI) has begun to freefall. When you have such huge simultaneous moves off the highs, it is a sign of a fundamental shift. Has the market decided commodities are no longer the place to make camp? Apparently it's that time again, the time for sector rotation, and the big money is tipping their cap and saying adios to commodities.

Where are they going? It looks like transports (particularly airlines), and the financial sector appear to be the benefactors. I would suspect that trucking may also find some relief, if oil drops, prices at the pump will soon follow. It may be a bit early to make this call, but more often than not, when we see big moves like this happen, sector rotation is the name of the game. This may be a good time to rethink your allocations of ETFs and index funds in your retirement account.

This is likely good for computer manufacturers as well, as precious metals will drop in price, as they are important in the production of printed circuit boards and other electrical components. Precious metals, particularly gold are important for miniaturization of components, such as those used in laptops and mobile devices, like Apple's MacBook, MacBook Pro, iPhone and iPod Touch.

Identifying a sector rotation in it's early stages is certainly speculative. Do you think big money is moving to financials? Write your comments below.

The Good, the Bad, and the Ugly

2008-04-23T18:33:00.000-07:00

We have three notables reporting today, Apple (AAPL), Amazon (AMZN), and Starbucks (SBUX). Apple reported outstanding earnings and great growth, especially with the Macintosh with 2.3 million Macs sold last quarter, representing a 51% growth over the same period last year. Apple after hours trading was a wild ride, with its price ranging 20 points, with a low around 155 and a high tipping 170, finally settling down 57 cents in after hours trading. The regular session closed $162.89 (+2.69). It was pulled down temporarily on conservative guidance and lower margins (-10%). So, all things considered, Good earnings, conservative guidance. Same old story from Apple.

Amazon didn't fair quite as well, even though they came ahead of estimates, down in after hours trading 3.59 (4.43%). The market punished the online retailer for reporting earnings of 34 cents, 2 cents ahead of analysts expectations, on revenues of $4.13 billion. Revenue grew 37% and guidance was in a range of $3.875 billion to $4.075 billion, a little better than analysts prognostications, but not good enough. The problem was that Amazon was a little light on revenue guidance, stating $19.1 to $20 billion. Analysts consensus was $19.3 billion. Apparently the market wanted to see the upper range of analysts estimates, plus these targets calculate to lower overall margins. Tuff crowd, there's the bad.

Then there's the coffee maven, Starbucks. They warned big time and got crushed! I guess $4-$7 cups of coffee don't fly in a slow, struggling economy? I pay $9 for a 2 pound bag of high quality beans from Costco, which makes scores of java servings!

So, what can we expect tomorrow in the market? Tech futures are down this evening, so you can probably expect the Naz to be down at the open, with high P/E stocks taking the biggest hit. The place to be is commodities and staples. In a dragging economy, these are the stalwarts. Also, there's Microsoft reporting tomorrow, perhaps they'll show the way. Don't count on it.

Over all, the indexes recovered some today, with the Dow, S&P and Naz all retaking critical support levels, but it was a struggle, so no real conviction their. The positive is that the oscillators are all in good shape, so there's room for buyers to take control. They just need something to give them some incentive, and I don't think today's earnings provided the necessary dose. Right now we're trading in a range across the markets, and that's a tough place from which to predict up or down. Expect more volatility, murkiness and ugly, before they get more clear. I expect this is the type of action we're going to see through the rest of the spring and summer.

-zach bass

Apple Beats the Street, Tempers Outlook

2008-04-23T15:55:00.000-07:00

So, what else is new? Apple reports outstanding growth, but provides conservative earnings guidance for the third-quarter. The market reacted to every word in after hours trading. The stock hit an initial high just north of 170 and then the report of lowered margins (-10%) sent it free falling just south of 155! Traders settled down as the report continued, to where it closed today 2.69 (1.68%) around 162 and change. The big news is that the Macintosh is a principal driver, with a whopping 51% increase in sales, equating to nearly 2.3 million units! Apple also sold over 10.6 million iPods, up only 1% from a year ago, and 1.7 million iPhones, putting them in line with meeting their 10 million iPhones sold by the end of 2008.

Now for the numbers: Apple posted a net income of $1.05 billion, or $1.16 per share, that's up 36% from a year ago. Analysts average expectation was $1.06, although in recent days, many analysts were inching that estimate up, some as high as $1.23. Apple had originally provided guidance of $0.94. Sales were $7.51 billion, up 43% from the same quarter last year. Analysts on average projected revenue of $7.01 billion.

Apple's forecast for its fiscal third-quarter was sales of $7.16 billion, roughly in line with consensus estimates of $7.2 billion. But the real knock was the very conservative forecast for earnings of about $1.00 per share, this is significantly below expectations of $1.10 per share. It's a wonder why investors react so violently, this is a well known pattern by Apple. Kind of like sneezing, where you can't stop from blinking your eyes.

Brilliance, or Manipulation?

Whatever you call Apple's pattern of blowout earnings, followed by conservative guidance, one thing is for sure, they are managing their stock price just fine, with it up 30% over the past weeks. Apple keeps the Wall Street analysts in check, making sure they don't get crazy.

Economy? Apple don't care bout no stinkin Economy!

Apple's CFO, Peter Oppenheimer didn't appear phased by the economic slowdown when asked in a conference call with analysts, saying that the traffic in their retail stores continues to grow. In fact, Apple plans on opening 45 more stores this year alone. Many of these new stores will be overseas. International sales accounted for 44% of Apple's overall revenue. This is going to be a key components as the US economy will likely move sideways in the coming months.

Ying-Yang, Bang

2008-04-22T17:48:00.000-07:00

The Bulls just can't get a hold of this market. Good earnings one day,the market goes up. Bad earnings the next, the market goes down. Today the market dropped below critical levels, the Bulls tried to rescue it, but failed. The Naz was the big draw down, losing gap up support. And the Dow slipped below the magic number 12,750.

I normally focus on technicals, but the real weight on this market are the culmination of poor economic news, the fundamentals baby; financial market breakdown, housing in a huge down-trend, oil hitting new highs every day causing inflation worries, etc. There's nothing for the Bulls to hook their horns onto to sustain a rally.

Perhaps earnings from AAPL tomorrow will provide the needed shot of adrenalin? We need something to get above resistance, get a foothold and move up. But pessimism is holding steady, and the Bulls are starting to show atrophy.

This is not the market to go long people. This back and forth action is just too risky to lay down your bets. My advice, sit it out for a bit, take it in. Cash is a position. If you do take positions, make them light and nimble, in-out.

There are some good plays out there, mainly in Energy, Commodities, Consumer staple. Agriculture is starting to weaken after a pretty good run. Most everything else is just too volatile.

Nows a good time to reflect on your trading strategies, adjust your plan, read some blogs, join my Google Group and download the trading plan template. It's a good time to tend to yourself, let the market do its thing, come back when the time is right.

-zach bass

Zach's Market Analysis, Taking a Breather

2008-04-21T19:14:00.000-07:00

The markets climbed the wall with vigor on Friday, but today it had to catch its breath. The good news is that we stayed above the breakouts we pierced so fiercely in the previous session, the unsettling news if that we didn't push away from them, the Dow remaining just above the critical 12,750 mark. On a breakout, ideally you want to keep the run going. So, it's cause for some contemplation. Also, we haven't reset the oscillators, remaining in an overbought condition. It would be better if they unwound a bit providing some running room for more buyers.

So, what this means is we are at some sort of cross roads. Not a good environment for considering longs, as there are no solid technicals to justify a position. This action is evident from a candlestick analysis, the Dow put in a red hammer with the tail bouncing off of 12,750 and ending a bit down from yesterday's close -24.34 (0.19%). This shows the Bears took control early on, eventually the Bulls took control and successfully defended their territory. The Naz and S&P showed more strength than the Dow. But they also had to fight off the Bears early in the session, with both ending in slightly positive.

AAPL on the other hand was in a different place today, up +7.12 (4.42%), shedding -0.81 (0.48%) in after hours trading. Unlike the markets, AAPL kept the run going and didn't look back. There's obviously a lot of optimism building prior to earnings. But you have to respect the action in the broader markets. So, my gut tells me the best course is to still play AAPL with care, and don't stay too exposed after hours. I still recommend paring down shares of AAPL prior to earnings, and lock in profits when you can. But man, look at the incredible rise in price and volume near the end of the session, that's a lot of optimism!

-zach bass

Apple's All Alone in this Marathon, Where's the Finish Line?

2008-04-21T06:37:00.000-07:00

Today, I'm just a few miles away from the start of the Boston Marathon, in Hopkinton Massachusetts. Traffic on Rt 495 has already picked up, as fans want to secure good vantage points to cheer on the runners. It's a good day for the runners, with temperatures in the high 40's right now, but expected to climb as high as 70. That'll separate the elite from the wannabe. And we all know who the elites are in this race, the Kenyans. Who in their right mind would bet against them?

And so it's the same for AAPL. In many respects, Apple is in a marathon, and it is the elite of the field. The goal is to retain the title it won last year, the 200 mark. And like the Kenyans, Apple will be looking to set a new mark in the race. They're running into new territory, the enterprise, the smart phone market, retail dominance, bringing Apple innovation to the masses. Apple's marathon may never end.

For Apple, the starting pistol will set off this race with earnings on Wednesday, and soon after there'll be the first checkpoint, likely to be in early June, when the iPhone SDK is released, along with the iPhone 2.0 OS and what many expect, the 3G iPhone. Then there's the iPhone Application store. What does that portend for Apple and the rest of us?

Well, Apple has been carbo-packing these last few months, building up the energy it needs to best the field and cross the finish line a victor. The thing is, 200, in my estimation, isn't the finish line. It's a much grander place.

So the question is, just where is the finish line for Apple? And what does it mean to attain this goal? Is it dominance of the smart phone market, the enterprise, the home market, or is it becoming the biggest individual player in each of these markets? Apple has recently become the 3rd largest PC maker, they are the dominant company in the MP3 player and handheld multimedia market, they may soon take over the smart phone market. And some say, the iPhone and iTouch have potential to grab the handheld gamer market. What's next by George, what's next?

-zach bass

Zach's Weekend Roundup

2008-04-19T19:45:00.000-07:00

This was a great week to be an AAPL investor and a solid week for the markets. The Dow, S&P 500 and the Naz all broke through their key resistances, with a tremendous surge on Friday, and put in 3 month highs! It was an amazing show of strength from the Bulls, and the Bears appeared to take a cold shower. Even in the face of horrible reports and huge write downs from the financials, the markets just shrugged it off and sent Merrill Lynch (ME) and Citigroup (C) higher. Obviously the market felt that they have already baked in the their weakness from as far back as Q3, and are looking forward to a more positive year coming.

The inverse head and shoulder patterns played out, fronted by the huge positive divergences that we have been following since mid February. Every time the Bears tried to break up this momentum, they came up dry with weak volume. This was in stark contrast to the Bull rallies, which were generally very strong.

So, now we've broken through the necklines, it's time to establish these as solid support and use it to launch a new upward trend. Looks like the drag of the financial and housing markets weren't enough to bring the rest of the economy into negative growth. I believe a lot of economists are going to have to reconsider if we ever were in recession. Sure we started to stall, with 0.6% growth in Q4 and 1% growth in Q1, but it looks like we'll end up with 1% or slightly better in Q2.

Bully, bully, bully! Agriculture, Oil and Tech have been big winners in the past couple of weeks, with energy close behind. And Transports did well despite the spike in Oil. The Bull/Bear spread on the Investors Intelligence Survey is still inverted, which is a contrairian bullish indicator. And the put/call ratio was down to 1.04 but remains above 1.0, which should still be considered a contrairian bullish indicator as well.

The key for this week, as I said earlier, is to turn the critical levels that were resistance on the Dow, S&P and Naz, into support. Those levels are: Dow (12,880), S&P 500 (1404), and the Naz (2440).

Can We Google the Bear into Submission?

2008-04-17T17:24:00.000-07:00

Tonight Google (GOOG) rocked in the after hours market with blowout earnings and a $77 surge, or 17%! Can this be the Bull whip the market needs to crack the nearly impenetrable resistance that the Bears have so successively defended? The time is now, if there ever was.

The fight will take place at 12,750 on the Dow. If we break through to the other side, there's nothing in our way for another 400 points, at least! If the S&P breaks 1385, it will have confirmed a 3 wave up, if the wave plays out you can expect to a run up to 1404 (Fib 1.618), or best case 1454 (Fib 2.618). The Naz nemesis is 2392. The good news is that the inverse head and shoulder patterns is still in play. When we come within striking at these levels, expect the bears to put up a spirited defense, and volatility to increase, be careful not to get too aggressive as we near these numbers. Better to take a sit and watch the game from the sidelines. There will be plenty of opportunity once they have cleared and backtested.

Today's action can best be described as a stalemate. It started with a decent selloff up until mid-session, then a rally back until the close, for a slight advance in in the Dow (+1.22), S&P (+0.85), and a mediocre decline in the Naz (-8,28). This can be attributed to overbought conditions across the board. A bright spot was the Naz holding critical 2330 support provided by the 50 day moving average. If we clear the inverse head and shoulder neckline with some force, the pattern will be confirmed, and the down trend could be over.

The tech sector has led the markets this week, with strong earnings from Google and IBM, after eBay and Nokia both showed weak outlooks last week. Merrill Lynch's poor showing on Monday was shrugged off completely, jumping 3.7% after reporting a $6.5 billion write down. Very strange indeed.

Apple (AAPL +0.79) had a slight gain, leading the market in the second half of the session with a surge to the close, but up sharply (2.76 or 1.79%)in after hours on the tail of Googles earnings. Apple will release earnings for Q2 2008 Wednesday, April 23rd. Below are the consensus estimates.

Data from Yahoo Finance reports 26 total estimates for Q2.
High Estimate: $1.18
Low Estimate: $ .94
Mean Estimate: $1.06

Q2 Previous Yr: $ .87
Apple Guidance: $ .94

Yr/Yr Growth:
Analyst Estimate:22%
Apple Guidance: 8%

Consumers Choosing Big Box Retailers to Curb Spending

2008-04-17T08:57:00.000-07:00

A report from Toby Smith's ChangeWave website says that consumer spending on electronics like iPods, cameras, and such, will slow in the next 90 days, 3% less than this past February. Consumers are avoiding the typical places to buy stuff at places like JC Penny and Sears, and flocking instead to big discount stores like Costco and Walmart. Good thing iPods are sold there too!

It's interesting, this trend has been developing over the past year and a half. But Apple seems to be impervious to this as people are still packing their retail stores. And product is flying off the shelves.

I guess after visiting the warehouse dinginess of a Costco, or the "consumer friendliness" of a Walmart, you need a spiritual uplift, so why not go to your friendly neighborhood Apple Store. Don't get me wrong, my wife and I frequent both these establishments, and take advantage of the values they present, but there's truth in the characterizations.

Oh, and bring your tax rebate check.

-zach bass

The Bulls Fight Back, Push Bears into Cave

2008-04-16T22:12:00.000-07:00

The Naz led all markets with Tech leading the way. If earnings from the Tech sector continue with the same veracity as today, it will force the Bears back into their cave. The thing is the Bears still believe they have a lock hold on this market, and when we have an over abundance of confidence (sentiment readings still show an inverted Bull/Bear percentage) that usually leads to a reversal. So, if the Bulls can keep the pressure on, it will force them into hibernation, due to the volume of shorts that need to be covered. The vacuum that will be created will create a chasm, allowing the Bulls to take the market higher. You be able to hear a big sucking noise, it will be music to our ears. Maybe you'll be able to purchase it on iTunes later in the week!

So now we have 2330 as strong support on the Naz. Todays action should allow the Bulls to hold strong, even with a few bad earnings reports. It's up to the Bulls now to take control. Should they fail, we'll all need to run for cover. There's still work to do on the Dow, so by taking out 12,750, we will have turned the corner and have started a new uptrend.

-zach bass

The Day the Market was Mesmerized, w/AH Update

2008-04-15T12:26:00.000-07:00

One of my favorite books, is about time, and written a long time ago (in the late 1800s). It's called "Looking Backwards," by Edward Bellamy. Mr Bellamy was a college dropout, utopian science fiction writer, and can be credited with inventing the idea of the credit card as a means of commerce.

It's a Rip Van Winkle Story, about a gentleman, an upper class man, from the year 1887. He awakens in 2000 from a hypnotic trance (he calls it mesmerizing) to find himself in a socialist utopia. It was a book of ages, it inspired the writing of scores of books on utopias, and spurred a political movement came to be known as Nationalism. It seems at the time, people were desperate for answers.

Well, this diversion illustrates how interesting the market is this afternoon. There's nothing to analyze, nothing to monitor, there are no answers, and no questions. Things are just quietly coming to a stop, volume is down, and so is volatility. There's nothing left to do but wait for news from beyond. News from the after hour.

Sooner or later, the market is going to like what it hears, and we'll have our rally. Will it be tonight? Not likely, considering Intel (INTC: +0.22) seems to have been bracing for impact before the session closes. It's the unknown that's so tedious. And when things get that way, I must let go, stop clinging, and retreat to a corner of my mind and dream of utopia.

---After Hours (AH) Update

INTC (+1.69:8.1%) earnings did not disappoint, in fact it was received very well and juiced up AAPL, and others, in AH. This was a nice cap to a drab day. The last regular exchange trade for AAPL was 151.30, (+2.93:1.97%).

OK, so Intel reported well, but remember that they had adjusted their guidance down mid-stream, in order to temper any weakness at reporting time. Fortunately, they came in line with their original guidance, even tacked on another 1% to their original margin forecast to 56%. Guess that mid-session adjusted guidance was not needed after all. But I think it was instrumental in adjusting expectations.

Let's not lose our objectivity here, we're not out of the woods until we see the majors reporting, then we'll re-evaluate based on the preponderance of evidence. We have some household names coming up (Google, IBM, Citibank, Caterpillar, etc). You have to be thankful for Intel, as it was welcomed news, and let's hope that it can be a catalyst to an upward trend. Just don't get too excited. Keep the emotions in check, and party on!

Is the Right Shoulder Revived?

There may be a silver lining for those perma-bulls out there with tonight's after hour action. And that is the right shoulder of the inverse head and shoulder that I have been tracking on the S&P and Naz, may have been rejuvenated. It still has a way to go before it regains the strength it had prior to last Friday, but a nice push through some key resistance levels and we would be in business. The S&P 500 needs to clear 1345, and the Naz, 2313.

-zach bass

Market Recap - An Epic Day of Blunted Demur

2008-04-14T20:54:00.000-07:00

Today was a day that will soon not be remembered. It was an epic of beaten warriors strewn across the field of battle, licking their wounds. The field swathed with the armament and spilt blood of near do wells, all but beaten down, but can't be, no, won't allow themselves to be finished off.

The last few sessions the Bulls were on the precipice of victory, with the right shoulder, of an inverse head and shoulder pattern, nearly complete. Then the great behemoth, General Electric, tells of horrifying conditions that swept the markets like a wildfire, sucking the wind and the ground out from under the Bulls.

Today, the battle field was still, as both the Bulls and Bears wandered in a cloud of confusion. The Bears can't understand what is keeping the Bulls afoot, after they inflicted pounding after pounding. The Bulls beaten down, but not out, knowing they have exhausted their supplies, and sensing the anguish of the Bears.

The market is in an untenable position where it is extremely oversold on the 60 minute charts. Which under normal circumstances would cause prices to rebound in following trading days, especially after being dragged down so viciously. But the Bulls cannot muster the energy to move upward. They know in their hearts of hearts that all the bad news is already built in to the market, yet they keep getting pounded with a never-ending stream of disappointments. And worse yet, on the horizon is earnings season. The fear is that the worst is yet to come.

As far as the technicals of the non-epic day goes, there was little volume. Only 1.6 billion share on the Naz, not enough to get any buying momentum going, 2 to 1 in favor of the down side. And 18 decliners to every 10 advancers. None of the markets were able to move up to the 200 day moving averages, which further displayed how weak this market is.

To ad to the misery, financial markets were breaking down, with ugliness spewing from Wachovia and Wells Fargo. There were some sectors that were performing well, namely agriculture and energy. And AAPL showed some initial gusto, taking back a few morsels, only to retreat some, ending up holding on to some measly crumbs. That's a wrap.

-zach bass

Market Analysis, and Strategy for Navigating the Froth

2008-04-14T10:41:00.000-07:00

I have a charts in my previous post that focused on GE, that describe our current predicament. The fact is, the markets have broken down, and control has been handed over to the Bears. So, when in Rome, do as the Roman Bears do... uh, are there bears in Rome?

We are very oversold on the 60 minute charts, and thus we can expect a bounce at some point, that should be a source of strength that we can use to short some positions. It will be interesting to see how AAPL behaves at that point. I'm not so sure it will be the best short candidate.

I want to sing this from the rafters, that I believe cash is the best position. I think things are too volatile right now, and there's no safe way to enter into a position quite yet. For those who have psychic ability, I salute you. And I'm sure you'll pat yourself on the back, and sing your genius when trades go your way. I'll be very happy for you.

You want to talk froth, check out the turbulence on this intra day chart of the S&P 500, as of 11:10 AM today (Monday 14th, 2008).

On the S&P we should look at the following resistance levels on the bounce:

1338, 1341, and 1352 if oversold conditions get strong enough.

It was key that AAPL loss the 150 level, and thus we're in no mans land right now, it will be a struggle to regain that level anytime soon, in my opinion. If we move up there on the bounce, I might recommend shorting. Also, I had GS out as an alert last week, but retracted it, as it lost 170, another key level, so same shorting strategy goes for GS as well.

Don't go overboard with the shorting, eek out your gains on strength, stay light, for those who are a little more squeamish, stay in cash. It's a fine position to be in at this time and you'll do just fine we other less-risky opportunities come our way. Do not think you can time this market right now, I guarantee you will come away with the short end of the stick more often than not.

So, to recap... look for the bounce, take light short positions on that strength as we approach the resistance levels. Buy to cover on weakness. (this is the inverse strategy of buy into strength in a Bull market). STAY LIGHT, CASH IS A POSITION!!!

-zach bass

Market Recap: GE, We Bring Bad Things to Light

2008-04-13T19:10:00.000-07:00

Here’s the Readers Digest version of last week in review. GE warns huge, Oil continues to climb, Financials are imploding, and earnings are on tap. Now on to the details...

Early on Friday morning I got wind of the Jeff Immelt (CEO of General Electric) interview on CNBC, where he tried to temper GE’s report of poor earnings and guidance by saying the first quarter results were “just a bump in the road.” But analysts were universally stunned, because GE has a long time reputation for providing conservative guidance and like clockwork, meets or exceeds that guidance. Upon hearing the news, I immediately issued a post to the AAPL Yahoo message board to take head in this report and recommended a predominate cash position. GE (-4.70) dropped a whopping 12.79% on Friday, and sent shutters across all the markets and wiped out recent gains made by AAPL (-7.41, -4.79%).

Many investors on the AAPL message boards have shrugged off this event, downplaying the report because the poor performance was largely due to GE’s sprawling financial services operation, and not so much by other GE divisions. But the consensus among industry analysts is universal, and that’s what really matters. At worst, most analysts expected the low end of earnings to be in the 50-53 cents per share range. No one expected 43 cents a share, and a 6 percent decline in profits.

Even Immelt was taken back by the poor performance, that mostly occurred in the last two weeks of March, and he linked it in part to the Bear Stearns debacle. He also attributed the bad news to their healthcare division and the slowing economy. On the bright side of the GE report, they have had stellar performance from their foreign subsidiaries, with 38 percent growth.

While I’m reporting bad news, I might as well pile it on with financials and oil. The downtrend continues for financials, as some of the stronger players, pierce their support lines, such as Wachovia (WB) and Wells Fargo (WFC).

And oil continues to rise, hitting a record $112 per barrel intr-day, and causing prices at the pump to soar across the country. This puts huge pressure on inflation concerns, and continues the squeeze on consumer sentiment, which was at a 26 year low. Hasn't been that low since the Reagan administration.

A possible near-term bright spot, are the negative divergences setting up in oil, signifying a possible retest of strong support at the $98-$100 per barrel range. Such a retest would relieve some pressure.

Apple is going to have to put on some kind of magic show this coming quarter to get people motivated to spend their discretionary monies. Let’s hope that Apples numbers don’t get swept out from under them late in Q1 like GE’s.

So, where do we go from here? I’ve been pointing to a bullish inverse head and shoulder patterns forming on the Naz and S&P. But with Friday’s action, we need to take a fresh look at things and re-evaluate, to see if sentiment has changed. The fact that strong support in the 20 and 50 day moving averages were compromised on Friday puts me on the fence, as to whether we can fulfill the head and shoulder bullish pattern, or if we are going to fall back to the next support levels of 1270.

With the bad news from GE, oil, and financials, it would not surprise me if we created some breathing room, and headed south a bit, to prepare for a backtest of the 20/50 MAs. And my suspicion is that backtest will give us a bit of trouble, before moving higher. Normally, an impulsive move down is not what you want to see on the right shoulder of an inverse head and shoulder pattern. What would have been preferable is to continue to shake off the remaining sellers, like we were doing, and clear the way for a breakout through the neckline. But now I fear that the Bears are going to be rejuvenated some. What we are left with is a quagmire, although a possible descending triangle forming might hold some hope, but that might not play out for some time.

So my best advice is to remain in cash, until we can make some head way through the new resistance. Like I always say, the most important thing in investing is capital preservation first, good profits second. And sitting in cash can be an enviable position. Besides, you want that cash to work for you when the time is right. Now, I do have some long alerts out there, in KBR and AG. Both weather the storm quite well. But I’m not going to invest a lot of time in them if they show any weakness going forward. Better to be safe than sorry.

-zach bass

The iPhone Corporate Opportunity

2008-04-11T07:03:00.000-07:00

From the iPhone's introduction, there was a brilliant opportunity to crack the enterprise barrier, it was a Trojan Horse for corporate America. The strategy is two pronged. Winning the heart and minds of the people alone will not work, the IS department and corporate buyer are the obstacle to break down.

First the easy part, win the hearts and minds of the public (suits their kids, managers, and their customers), by exposing them to Apple design aesthetic and create the best user experience possible. This is the catalyst that will open their minds to the enterprise possibilities. I had no doubt this would happen given Apple's reputation for user-focused design, it's tacit knowledge.

The second part of the strategy, was to squelch the objections of IT/IS and the buyers by convincing them that Apple can play in their sandbox, even though they had never shown the wherewithal for doing so in the past. The answer was iPhone 2.0, which consists of the iPhone SDK and the iPhone App Store.

Well, the strategy is unfolding. The Apple kool-aid is being consumed by more and more corporate types, they will unwittingly sip it, and fall haplessly into Steve Jobs' Reality Distortion Field. But that's a good thing, right? Right!

The Safari browser is a key weapon that Apple will use to penetrate the enterprise. Making the browser experience as close to a desktop browser experience is one component. The other component is unifying browser standards across all platforms. This strategy is designed to make web applications accessible to the iPhone, and ultimately accessible to iPhone derivatives. The principal tactic is to make JavaScript and CSS the de-facto standards for user interface design, ultimately rendering Flash impotent. This is why, in my opinion, Apple has snubbed Adobe's lobbying for iPhone Flash support. It's smart, it's also payback for Adobe's lack of attention to the Mac platform!

Is there a killer application, above all the other corporate needs that will make the iPhone a compelling enterprise device? There's recent buzz around the iPhone as a social networking device. Perhaps that is the killer app? Until the iPhone there hasn't been a mobile platform that could easily support the type of interaction that a social site like LinkedIn, Facebook, or Orkut, would require.

It's hard to imagine that a social networking experience will evolve on the iPhone outside of a business context, only because there are simply not enough people that own iPhones (compared to Internet phones in general) to engage in connected interest. At least this won't happen organically until the iPhone has the same kind of penetration as the iPod.

Organizations of all types are primed for social devices, such a device could increase productivity and communication, and become integral to daily workflows. Abeline Christian University is intent on implementing this very thing. iPhones are to be distributed to every incoming freshman and integrated into their registration process, allowing them to organize their class schedule, and even become an essential tool with class curriculum. There's several well produced videos by students of the university that depict the vision. The video is spectacular, the vision is very forward thinking, yet attainable because of the iPhone.

Also, Vanderbilt University just released a version of its Web site’s home page specially designed for the iPhone. Vanderbilt is one of several universities seeking to implement campus-wide initiatives that aim to capitalize on the device’s potential as a converged, mobile learning tool.

-zach bass

Take Five, We Need a Reality Check

2008-04-11T05:51:00.000-07:00

I want you to sit back, clear your mind, and reflect on where we are, how we got here, and what keeps us going. Then, I want you to play the following media montage in your mind.

The montage starts with negative earnings and poor outlooks from companies across every sector, jobless claims and unemployment rates rising, housing markets in free fall, new home sales down affecting thousands of builders, sub-prime mortgage crisis, accelerating foreclosures, a dollar that is in free fall while the fed pumps never ending streams of money into the economy, growing trade deficits hindering our ability to compete, oil hitting all time highs, gas prices that make me wish I had bought the hybrid version of the Toyota Highlander instead of the normally aspirated V6 (sweet ride). The jump in gas prices have raised the cost of transportation, which in turn inflates the cost of virtually every product on the store shelves.

Is that a clear enough image for you?

Yet through all this AAPL and the markets want to go higher, depressing story after story is shrugged off by the market. And the irony is that we're at the cusp of an inverse head and shoulders breakout, one of the most reliable Bull patterns.

It's gotta make you pause. Can we do it? Or are we just another bad news story away from a complete reversal and market colapse? This is our reality. A classic struggle between the Bulls and Bears, cold steel rain and green fields, good vs evil, coke or pepsi, uh, err...

Anyway, I just wanted to illustrate that in order for us to navigate this market, and making money, we need to keep things in perspective. Don't let a little run-up cloud your vision and affect your judgement. I've said it before in several recent posts, I'll say it again so that it's clear and unambiguous; our NUMBER ONE priority is CAPITAL PRESERVATION; our number two objective is making a decent return.

So, you have to respect where we've been, how we got here, and what the challenges are ahead of us. It is tenuous, but we must rely on our good senses, experience and willingness to accept the truth. Therefore, this situation requires that we stay mainly in cash, let the Bulls and Bears fight the good fight, and when they're done, they will have illuminated the path that we should take.

Enough said.
-zach bass

Nice Shoulder, Can I Touch Your Neck?

2008-04-10T22:01:00.000-07:00

Gotta love the action today. The right shoulder of this inverse head and shoulder pattern is setting up very nicely. But until we see a breakout above the neckline, that's all it is, a nice right shoulder forming. This is typical with this pattern, Bulls and Bears playing a tug of war, jockeying for position. Yesterday it was the day of the Bear, today it was a Bull day. We might see this go on for several more days, you just need patience. There's no guarantee either that we'll see a breakout at all, so prepare yourself for that scenario. But more often than not, this pattern is a winner.

A breakout on the Naz would need to pass through 2360, on the S&P 500 it's at 1387. If and when we pierce the S&P neckline, the next stop is the 200 Day Moving Average (currently at 1444 and change), so I wouldn't be thinking short here, just wouldn't be prudent.

So what made today such a good day? Well, advancers led decliners about 3 to 2 on the Naz, and 2 to 1 on the NYSE! Most stocks, like AAPL burst out of the gates early and held their ground right to the end of the session. And this all happened with markedly better volume than we've had the past two days. So, consider, down days we had lack luster volume, and today we had a big increase in volume, that's bullish in my book. I'm just not gonna let it get to my head just yet, and neither should you. Best to be stoic right now, supress the emotion. Remember, there are Bulls that are just as eager to bring this market down, so show them the respect they deserve. Only after the breakout can you have bragging rights!

The best recommendation is to have your cash ready. Because when she blows, your gonna want to shoot your wad.

-zach bass

Red Pill or Blue Pill Zach, Your Choice

2008-04-09T17:31:00.000-07:00

Morpheus: "This is your last chance Zach. After this, there's no turning back. Take the blue pill, the story ends, and you buy a no load S&P 500 index and you dollar cost average yourself into blissful ignorance. Take the red pill, and you will embrace painful truths, and I'll show you how high AAPL can go."

The choice is not between taking an actual red pill or blue pill. Is truth and reality worth pursuing, or are we fine to accept secured comfort? Pink Floyd said it well in their song, Wish You Were Here, "...did you exchange a walk on part in the war for a lead role in a cage?" I could abandon the pursuit of AAPL and the Markets right now, pocket a tidy 20 percent gain made the past few weeks, and avoid all that hard stuff. Or, I could take the challenging path, analyze and accept the risks, reach for the glory.

I'm not going to sugar coat today's market action, it simply wasn't that good. Sure there are bright spots, like the volume, it was really low. The Bears had the opportunity to take the markets and AAPL down, but they didn't. On the other hand, the Bulls didn't step up and seize the opportunity. That was a real disappointment.

Market indexes butted into their 50 day EMAs and bounced off it, similar action with AAPL. But still no conviction in that bounce. There were things weighing heavy suppressing any advance, like oil hitting an all time high intra-session ($112.21), and Goldman Sach reporting a double dose of bad news. The Inverse Head and Shoulder pattern on the Dow, S&P and Naz are all still intact, remaining Bullish. On the S&P, we've got to break through the 1388 mark, the neckline, the obstacle to nirvana.

So the question is, do I take the safe route and pocket the profits in hand, clean, no mess? Or do I look back at what has been accomplished, and follow my convictions on where I believe the market wants to go? I've put up the good fight to this point, I've done the analysis, and reasoned the outcomes to the upside and down. It's time to enter the trail that I have cleared, and take that walk.

And Morpheus said: "Zach, sooner or later you're going to realize just as I did that there's a difference between knowing the path and walking the path."

This Lone Wolf Befriends the Sheep

2008-04-08T19:53:00.001-07:00

I'm accustomed to bucking the trend, going it alone, taking the less travelled path. I'm the kind of guy that shuns the drab of the highway, preferring to search out alternate routes, spy future destinations. I can't tell you how many times I've been in the car with my wife, arguing because I chose to take the "scenic route" home. But that's me. I'm always scouting for the unexpected, the undiscovered, the unnoticed.

Well, after peering around some, I see something in this market that a lot of other people don't seem to notice, and it's looking tasty. All I hear is misery and mire, and it ain't gonna get any better any time soon. I'm not buying it, heck, it should be tacit knowledge that the media has a stake in this kind of doom and gloom. That's what they sell. Of course there are those pesky dark economic events that keep cropping up; bad earnings here, jobless claims there, financial institutions crumbling over there. Dang!

And yet, I've been avoiding this well travelled path of despair, and lately I've been getting this whiff of something intriguing. All along I've been bucking the mainstream and calling this market with fair regularity, feeling my way through, looking under here, peering over there. And wouldn't you know it, I've developed a different perspective on the landscape, and it don't look so bad. Here's why...

I've noticed this positive divergence in the major indexes, the Dow, S&P 500 and Naz for several weeks now. And recently I've seen the formation of a nicely formed cup and handle, which is starting to form into a classic Inverse Head and Shoulder (IHS). Now, all you chartist out there know an IHS is a bullish pattern. It was the formation of the right shoulder down, you want the Bears to lose their conviction here, and those bears were sheepish, evidenced by the ultra low volume, 1.63 billion on the Naz. This is precisely what you want to see.

Now, if I'm wrong, and this wasn't text book action, then the 50s are gonna get taken out, and all bet's will be off, and the Sheep will have bit this wolf in the ass. Well, I'm sticking my nose out and saying, "I've been down this road before, and there's a mighty nice den around that bend. Why don't all y'all sheep come over for lunch?"

Now for some more technical stuff. I saw some confirmation as well. The negative divergences I have been clamoring about were taken out today, and the oscillators got reset. The next step. or steps, is to move through some semi tough resistance, also called the neckline in the IHS. In terms of AAPL, the S&P is the index to watch, the neckline there is sitting at 1389 or so.

So, if the market starts lower tomorrow, with weak action, bounces of the 50s I would buy that weakness, with a tight stop. The 50 Day EMA is at 1353, and it's the first line in the sand. If we go below the 50 Day MA, currently at 1346, that would be undesirable. It would be hard to imagine losing it. I believe this pattern will play out.

-zach bass

Markets Forming Bullish Patterns Across the Board

2008-04-07T20:15:00.000-07:00

The Dow Composite, S&P 500 and the Nasdaq are all setting up beautiful Bull patterns, Inverse Head and Shoulders across the board. I described this for the S&P in my previous post titled At the End of the Day Market Said Buy. There's still a lot of pessimism out there, and Alcoa (AA) earnings warning contributed. But the internals of the market are telling a different story. This is exactly what we like to see, shorts believing this recent rally isn't for real, while the internals disagree.

Advancers led by an 18-14 margin on the NYSE, while decliners led 15-14 on the Nasdaq, and new highs-new lows were 81-16 on the NYSE, and the Nasdaq was pretty flat with 57-79, but the Naz is traditionally a laggard anyway. And if you've been following my reports for the last several weeks, I've been screaming that long-term positive divergences have been setting up. We had some recent pull backs and then shot through resistances and tested them successfully on the backside providing future support.

What is required here is a little patience as these right shoulders form. There will be some pullbacks, but that will be healthy for the pattern and will present buying opportunities. I see the markets and AAPL going higher in the near future. I don't think it wise to jump in here, wait for buying opportunities and then lock and load. Also, going short has no real future. The more cash you have on-hand, the better. And hopefully you took some off the table and sold into strength today before the AAPL retraction, as I alerted to this morning on the Yahoo AAPL MB. That cash will come in very handy shortly.

-zach bass

At the End of the Day Market Said Buy

2008-04-07T15:32:00.000-07:00

AAPL gapped up today, then continued to rise. About midway through the day it retracted, shedding most of its gains, but retaining the gap-up. The S&P tested resistance, set back on February 13 at about 1370, to start the formation of the right shoulder of an inverse head and shoulders pattern.

The cool thing is that volume was light on the selling down, relative to average volume. This is a sign of weakness on the Bears, and conversely strength resides with the Bears. The backtest confirmed strong support at 1370.

Another bright spot, besides having another green day(+2.81), is that AAPL let off some steam, and reset its oscillators. So, I it's in good shape going forward, and set to move higher, along with the S&P.

We are now in a buyers market, and we're set to go higher here. Have patience.

-zach bass

AAPL vs Economic Calendar for Week of April 7,2008

2008-04-06T20:00:00.000-07:00

Apple triumphed last week by breaking major resistance in its 200 day moving average. The next challenge is to establish the 200 as a base of support by backtesting it and moving higher with volume. So, what obstacles does Apple face this week?

Monday is the Consumer Credit Report (Analysis by Bloomberg), which is a lagging indicator of consumer spending activity. This is one of those ying-yang indicators where if outstanding credit balances rise too much, the people may not have the fortitude for continued spending, conversely interest rates will lower to attract new spending. And the reverse is true if credit balances are lower than expected. This could affect AAPL negatively if the reported figure is much higher than expected. It is reported at 3 PM.

Tuesday is Consumer Spending (ICSC-UBS), Retail Sales (US Redbook), and Pending Home Sales. The ICSC-UBS index is one of the most timely indicators of consumer spending, since it is reported every week, the US Redbook measure of sales at chain stores, discounters, and department stores. It is a less consistent indicator of retail sales than the weekly ICSC index (fxstreet.com reports, along with US Redbook). It seems the market was unimpressed with the rise in consumer spending, evidenced by the tepid response in the futures. Should provide a nice buying opportunity for AAPL.

Even in this tough housing market, existing home sales have been relatively strong. This should not affect Apple regardless of the outcome. If the report is significantly above or below expectations, expect a momentary bump in the markets, and then they will likely even out. Here are the results, as reported by MarketWatch (down 1.9%). Man, can nothing bring this market down?

Wednesday is the MBA Purchase Applications report and the Wholesale Trade Report. The Whole Sales Trade Report is an indicator of the over health of corporate profits. This might be important for a conglomerates like GE, but Apple will not be affected by the report unless it is totally out of whack with expectations - not likely. (Update, turns out the Wholesale Trade Report came in above expectations, cool!).

The MBA Purchase Applications report is a gauge on applications by consumers for loans on new home construction. And the report is very positive, as new applications jumped over 5 percent (source, MarketWatch).

This is significant, because new home sales over the past, well forever, has been one of the biggest drags on the economy. For every new home being constructed means more people working, means more money pumped into the economy, means more Macs and iPhones walking out the door!

Thursday Jobless claims rears its head again. This is a big test for the Bulls. If there is another push higher in jobless claims, will the Bulls be able to stave off the Bears as they had several times before? On the other hand, if the jobless rate is flat or lower, watch out. Apple and the market will surge.

Friday is a bell weather report, Consumer Confidence. I believe consumer confidence is turning for the better. I have no objective evidence to support this prognostication, so we'll have to wait and see. If it is somewhat below expectations, all I can say is, good thing it's reported on Friday.

There are also several companies reporting as it's that time of the year again. The only company that might have impact on Apple is Circuit City, ad they are direct competitors to Best Buy, which is in bed with Apple. It may also be interpreted as an indicator of consumer's appetite for gadgets and computers. I don't think it will have much bearing on Apple.

All in all, I think this week AAPL will have a shot at it's next resistance level of 160, but I think it will have to unwind its oscillators some, as it is a bit over bought.

That's a wrap,
-zach bass

What Is the Market Telling Us?

2008-04-06T09:32:00.000-07:00

I swear, the media is determined to bring this market down. All you read and hear is recession, even the Fed Chairman is a doubter. Are we to believe this diatribe, or is the market telling a different story. The fact is that the media sells stories that have a maleficent undertone. They paint a picture of doom and gloom, that's the hook, that's what keeps us coming back for more. Sick, but true.

Once the doom and gloom schtick has cleared, the story loses its stickiness, and the media loses it's incentive to continue. Just like the Iraq War, once the surge started to work, it was like the war didn't exist, at least until there was a bell weather event that the media could exploit, like when we reach 4,000 American Soldiers killed. I'm sickened by this. We must remember these brave men and women for the sacrifice they made on our behalf.

The message of the financial markets (Dow, S&P, Nasdaq, etc) on the other hand, are not status reports of our economy. The markets are harbingers of what is to be. It is a reflection of the combined wisdom of millions of people, analysts, corporations, industries, and regions. The market is the closest thing to our collective consciousness, and it is imperative that we understand the message it's trying to tell us.

So, what is the market telling us? Are we delving deeper into a recession? Or, is there something stirring deep inside the market's gut that's going to short-live this recession, and spur a resurgence of economic vitality? One thing is for sure, the economy has been in flux, and the bell weather reports are largely negative. But a strange thing has been happening the past few weeks. Even in the face of horrific Jobs reports, rising unemployment numbers, and the implosion of financial institutions, the Bulls just won't let the Bears take control. So, here is what I interpret the market is saying.

Back in October of last year, the Dow broke out of major resistance at the 11,750 level (as seen from the 9 year chart) and climbed all the way up to approximately 14,200 before we had that precipitous drop. So, to turn the resistance line into support, we needed to backtest that resistance.

The first test of this line was back in early January, which kicked off a dead cat bounce rally that lasted until the beginning of February, or so. Then we went down for another plunge, only to backtest this level. And to the dismay of the Bears, it was a success. Thus confirming that this level now represents strong support. The Bulls win a major battle!

The shorts are still reeling over this, with their inane FUD posts on all the financial message boards and blogs. And those investors that are still clinging to the short frenzy over the past couple of months, are getting their clocks cleaned now.

The fact is, that 11,750 on the Dow represents strong support now, and the market is heading up in an impulse wave, that is a prognostication for a short recession. The down trend is dyeing, long live the down trend. It appears that the market wants to go up, and is telling us that now is the time to go long, and to continue this Bull Rally to its fruition.

-zach bass

The Zach Bass Investment Philosophy, Part2

2008-04-06T05:18:00.000-07:00

What do you need to know when your investing thousand, perhaps hundreds of thousands of dollars in a stock? Well, in the astute words of the smart real estate investor, philanthropist, author of many books, such as "The Action Principles," and world renowned martial artists, Bill Fitzpatrick, you need to "Know Everything." Before you buy a single share, before you purchase that investment property, you need to know everything there is to know that might influence that investment. Otherwise it's a fool's gambit.

You need to know the company behind the stock, its products and competitors. You need to have an acute and tacit knowledge of the industry, sector and market conditions that will likely influence investor sentiment. You must know how to analyze the fundamentals of this company, as well as the fundamentals of the market and industry it belongs to. You need to be a skilled chartist to perform technical analysis of the stock and markets to understand resistance and support levels, price/volume momentum, contrarian indicators, patterns, and much more.

Believe it or not most investors go long or short on a stock based on their feeling that it is likely to go their way after they purchase that stock. Let's be honest, there are some people in this world that have extraordinary capabilities that allow them to see things that others simply cannot, these people are called savants. Savants are learned, distinguished professionals that have earned their spot through hard work and innate brilliance, then there are the idiot savant like rain man, who are mostly good at just remembering stuff, not very good at analyzing and predicting. Then there's Marilyn Vos Savant, she's just brilliant and a looker to boot!

So, the one piece of advice that I would impart onto you before making any investment decision, the mainstay of my investing philosophy, that would be, know everything. Once you know everything, then you need to develop a plan, a strategy for entering into the investment, and a strategy for managing it while you are a holder, and a strategy for exiting the investment. This process is not stagnant either, it a free flowing, more artful than mechanical. You might do well to read The Art of War, by Sun Tzu to gain a full appreciation, as many a business men and investors have found applicable wisdom in it. Investing is not unlike what the general must do in preparation for battle. And like battle, you never know what the enemy (market forces) is going to do, so in all likelihood, your plan will change. This means that you must have a strategy the is adaptable.

I'll finish this segment with a look at what the plan looks like and a definition of the key parts. Every trade you make should have the following components:

Entry - the price you should try to get within a defined range.

Target - the price you have determined to be the upside potential to be.

Stop - the price you should sell at (usually on a closing basis, sometimes intra session) if it falls below the Entry.

Risk - a factor (low, medium, high) that assesses the chance that the stock will achieve the Target price

In future installments of "The Zach Bass Investment Philosophy," I'll go into more detail on developing the strategy and methods of analysis. And Ill make the distinction between managing in-and-out trades, versus managing a long term trade like APPL.

-zach bass

The Zach Bass Investment Philosophy, Part 1

2008-04-05T03:27:00.000-07:00

Individual investors are perpetually searching for the investment philosophy that'll bring them the wealth and independence they believe they so rightly deserve. Should I buy low, sell high; or should I buy and hold? What's the best strategy to make money, preserve my capital, how do I avoid going on full tilt?

Well, I'm going to tell you that ALL the strategies are full of bunk. All investment strategies are full of bunk because the underlying assumption is that you can consistently beat or time the market if you follow that strategy. Why else would you adopt a strategy in the first place unless you believed you could beat the market? Winning is the name of the game, right? And to win, you must have a plan. A man, or woman, without a plan is not a man, right?

Sure, there are fellers that beat the market and make fortunes. There are also guys that make it to The Show (that's baseball lingo for the Major Leagues). But they are so few and far between, why would anyone think there's a strategy out there that will afford anyone the opportunity to achieve this kind of success. The fact is that there is no such strategy. It's just that some people are blessed, or have the capacity to develop extraordinary capabilities that allow them through hard work and dedication to achieve the pinnacles of success. And once in a while a person can get lucky and win the lottery too. But the average Joe is just not going to reach the top, no matter what the strategy.

Well, why can't everyone be a winner? Everyone can't be a winner on these terms because if everyone was a winner, the definition of winner would no longer have any value or meaning. Besides, it really comes down to how you define winner, and what it means to win. So, your investment strategy should have a goal, but I don't think it should be winning. Because if it is, you may never achieve that goal. And what good is it to have goals that you may never achieve.

Now, I want to make something perfectly clear. I'm not saying that you can't achieve fantastic wealth and independence. And I'm not saying that you shouldn't set lofty goals, or lower your expectations, or just strive for mediocrity. On the contrary. What I'm saying is you must redefine, the goals that your trying to achieve, and thus your strategy should really be a philosophy that guides your actions.

You see, the reality is that even if you achieve the pinnacle of success, if that success doesn't make you happy, can you truly consider yourself a winner? Now we're getting down to the nut. The philosophy for successful investing is the same philosophy for any pursuit in life. And that is, the act of investing itself should bring you joy, fulfillment, and happiness, whether you are in the black or in the red.

I would compare this to going to the casino. Most people go to the casino with the hopes of winning, and many of us prepare for the casino games the best we can to give us the best chance possible to come home with more than we left with. But the real joy of going to the casino is the action, the lights, the shows, the girls. Did I say action? And sure it feels better to come home with a big wad of cash, but if you come home with nothing, then you lost only what you felt was an appropriate amount to lose and still have a good time, so then either way, you're a winner. If it's any other conclusion, then you have a gambling problem, perhaps an obsession that needs professional attention.

So, with this preamble, here's Zach Bass' philosophy for successful investing. Invest only what you can afford to lose and have fun investing. Educate yourself to the hilt. People ask me how much should I know before I even start investing. Well the answer to that is you need to know everything, and with that standard you should never start and you'll probably be way ahead of the average investor. But that's obviously not the answer you want to hear, because you want to invest, and you want to have fun, and having fun means enjoying successes. The thing is, without the education, you'll be hard pressed to enjoy consistent winning trades.

Education is the most important aspect of investing, and so you should have fun educating yourself. Besides, having fun and enjoying the action is the real goal, so arm yourself with as much knowledge as you can, then ask the following questions to determine if you were a winner: Do I feel good about the effort I put into that investment? Did I enjoy the process of educating myself for that investment? Did the results of the investment meet within the range of expectation I set for myself? If you answer in the affirmative for each of these questions then your investment experience was a success.

Here are some bullet points that should make your investing fun and successful:

Only invest what you can afford to lose, some reasonable percentage of your total net-worth, based on your risk tolerance. This is your speculative account. For me that percentage is 20 percent, for some it will be more, others less.

Diversify all other assets into long-term investments like index funds, bonds, real estate, etc., if you are employed by another, take full advantage of their retirement vehicles, if self employed, contribute at least double the maximum.

Pick an industry and/or company that you find great interest in and learn everything there is to know about that industry/company, stay current. Continuously search out great resources.

Learn everything there is to know about investing; the markets, technical analysis, corporate balance sheets, fundamentals, strategies of the successful, etc. It is important that you enjoy this part. If it's a drag or you suck at it, you're better off stuffing your money in a diversified mix of EFTs and Index Funds and forget about it, you'll do OK that way.

Do not let your speculative investing activities contribute stress to your life. This actually goes for just about any activity or endeavor you pursue. Life is short, and you only got one shot at it, have as much fun with as little stress as possible.

Just What is Too Much Cash?

2008-04-04T20:51:00.000-07:00

There are a lot of things that having too much of, would definitely be a bad thing. Like too many Ho Hos, or too much to drink. But I can't think of a single reason why having too much cash on hand could possibly be a bad thing. Unless of course it's bulging out of my pockets and I happen to saunter into the wrong neighborhood. But besides that, I like the idea of having too much cash. I'm sorry, I just can't get the the phrase "too much cash" out of my mind. It's an oxymoron, like too much fun, or too much sex. Yet there are people out there castigating Apple for having too much cash. $18 billion dollars, to be exact.

Steve Jobs looks at it like a rainy day fund. Apple has been planning to build a much needed satellite campus. And Steve has been known to show trepidation and pause when he considers the $2 billion price tag, even though it is a mere drop in the bucket.

So, what should Apple do with $18 billion? Should they give it back to the investors, should they make some key acquisitions. Or should they just keep accumulating it for some really enterprising move?

-zach bass

ZACH BASS - Profit Alert BHP

2008-04-04T16:36:00.000-07:00

I posted this alert on Yahoo's AAPL message board. The time of the alert was 2:12 PM today. Here's the link to the Yahoo post:

BHP Profit Alert

If you got in at the price when the long alert for BHP was first announced, and exercised this profit alert, you would have made a very nice 9 percent profit in just a few days. In the profit alert, I recommend taking half off the table and tightening up the stop to $72.40 guaranteeing at least 6 percent on the remaining half.

At the end of today's trading, this is where the two original long alerts stand:

DBA - an Agi EFT
basis price: $37.38
current price: $38.42
%gain/(loss): 2.78%

BHP - a natural materials fund
basis price: $67.75
current price: $73.22
%gain/(loss): 8.07%

-zach bass

ZACH BASS - Long Alert: KBR

2008-04-04T14:34:00.000-07:00

KBR, Inc. operates as an engineering, construction, and services company supporting energy, petrochemicals, government services, and civil infrastructure sectors worldwide.

Best Entry $29.50 - $31
current: $30.35
stop: 28.50
target: $35
Risk: medium

That would give it approximately a 3 percent down side risk, and a projected 15 percent upside potential.

-zach bass

ZACH BASS - Market Update

2008-04-04T11:23:00.000-07:00

The market has stepped back a bit based on the negative news, but not so much that there's any worries. The Bears are feeling a little sprite and getting a bit overzealous, evidenced by the put-call spread, which is now at 1.46. This is good news for the Bulls, and in short order will likely lead to a reversal. The important thing for us is to hold the 50 day EMAs across the board.

Apple has been bucking the market and holding steady, right at the resistance level I have been pointing to, around 152.55. I don't think we are going to see any near-term correction, so I would recommend to buy on any weakness.

If the 50 day is compromised, then the story changes. For this reason I would stay awake during this session and watch the 50s. The problem is that there are negative divergences that have set up on the 60 minute charts that loom over us. The daily charts show positive divergences, thus my trepidation.

-zach bass

iPhone Shortage, a Problem or Strategy

2008-04-04T10:21:00.000-07:00

Reader Doug sent me a a very kind note, and in that note asked me to comment on the recently reported iPhone shortage at Apple stores around the country. Let me preface this with the fact that I'm not an analysts like many well known pros, who have tremendous resources and industry insiders to talk to. And it's clear everyone of these analysts have an opinion, and those opinions are as varied as can be.

Some believe it's an accounting thing, that Apple makes sure that AT&T stores are fully stocked because every iPhone they supply there is accounted as a sale, where every iPhone in an Apple Store is accounted as an iPhone in stock.

Other analysts, like Gene Munster of Piper Jaffray, think the shortage is an imminent sign that Apple will soon be shipping the 3G. And that they're clearing shelves to make room for it. This is supported by the story I reported on the other day about a source that claimed 3G iPhones a ready to ship.

The third theory is that the shortage is due to Apple production blunders. And that Apple was simply the victim of manufacturing snafus and poor planning. At least that's how Apple specialist Toni Sacconaghi of Sanford Bernstein sees it, as reported by the Fortune 2.0 Blog.

I tend to put some credence in Toni Sacconaghi analysis, but I'm not so sure that's the whole story. I think it's a more fundamental reason. Apple can't keep iPhones on the shelf because consumers simply recognize that the best place to buy an iPhone is at an Apple store, and it's the reason I bought two iPhones at my local Apple Store. The experience is simply superior. You go in tell them you want an iPhone, they take your order on a remote handheld device, bag it, and your out in three minutes tops.

If you've ever gone into an AT&T or Verizon store, the experience is quite different. The moment you enter the store, you're attacked by a greeter that takes your name, the greeter interrogates you, puts you on a list, and you wait for ever before a greasy sales guy saunters over to take your order. That guy will probably try and talk you out of the iPhone if there's a Sales spiff that puts a few more dollars in his pocket. He could care less what you really want. Then you are directed to stand in line and wait some more.

In my opinion, iPhone shortages at Apple stores are because demand is increasing beyond what Apple had expected, and people are far more inclined to go to their local Apple Store for the experience they want, rather than go to a vipers pit for an experience they would rather avoid.

-zach bass

ZACH BASS - Pre-Market Addendum

2008-04-04T09:08:00.000-07:00

Well the jobs report was not good, the US economy shed 80,000 jobs last month according to Reuters. And unemployment moving up to 5.1 percent. This flies in the face of analysts consensus of 60,000. Who are these analysts anyways? They're akin to weathermen, 100 percent right 50 percent of the time.

The dollar was making real strides last night against the Yen, Euro and British Pound, but it looks like that trend is reversing. As I warned yesterday in an AAPL message board on Yahoo, I didn't feel it was in our best interest to get too aggressive in the face of the Jobs report this morning, looks like that advice will pay off. Now the test is to see how resilient the Bulls are. Can they stave off this bad news like they have the past several sessions?

Now, even though futures have gone from slightly positive to essentially flat this morning, sentiment is on our side. The Bulls seem like they're still in control. It appears AAPL is not daunted by the jobs report this morning, but that could change at the opening. Be patient, look for the market to be a little crazy at first, let it settle out, then make your move. Holding all long alerts until further notice.

That's a wrap.

-zach bass

ZACH BASS - Pre-Market Note

2008-04-04T08:15:00.000-07:00

Yesterday started out looking weak, and the unexpected spike in new Job Claims didn't help. But the market held up well, the Bulls defended the 50 day EMA quite well, even considering the back and forth action. This morning there's the Jobs report. If it's really bad, it could send the market down hard, if it's marginal or good we should be in good shape. It would be interesting to see if it was a bad report, if the Bulls hold their ground like they did yesterday. That would be a very good sign indeed.

Analysts are expecting Friday's report for nonfarm payrolls to shed 30,000 jobs in March (overall 60,000), and unemployment to inch higher to 5.0 percent after a February decline of 4.8 percent.

The task of the Bulls, should they accept it, is to maintain the 50 day moving averages across the board. That would evolve the 50s into an excellent platform from which to build support, where in past weeks, it's been strong resistance.

The alerts I put out are working great! After just a few short days, we are well on the way to reaching the aggressive targets that I set. If they pull back due to a weak Jobs report, don't worry, we'll manage the downside and preserve capital. Both plays, due to the markets they are in, have some natural resistance to inflationary reports, so I'm not too worried. Here are the stats to date:

DBA - an Agi EFT
basis: $37.38
close: $38.21
target: $40
%gain/(loss): 2.22%

BHP - a natural materials fund
basis: $67.75
close: $70.55
target: $76
%gain/(loss): 4.13%

-zach bass

ZACH BASS - Apple News Shorts

2008-04-03T16:43:00.000-07:00

Apple Inc vs The Big Apple
According to Apple, the logo that the New York City's GreenNYC Campaign has chosen is too similar to Apple's logo, and says stop it or else. The nonprofit tourism and marketing office is obviously playing off the "Big Apple" nickname for NYC. But Apple won't have it saying it infringes on their trademark, and has filed a formal oposition (.pdf). The logo is a stylized Apple with a stem and leaf that morphs from an infinity symbol.

Coffee break, should we go to Starbucks or McDonalds?
Could you have imagined seriously considering that choice in years past, please! BloggingStocks.com reports that McDonalds is going upscale with lower prices and designer coffee. They are also refurbing stores with mock-Starbucks furniture and Wifi. Sure, a Grande at Starbucks will set you back four bucks, but they've got iTunes and free Wifi. Decisions, decisions.

iTunes is Now Top Dog in US for ALL Music Retail
Apple surpassed WalMart recently as the number one retailer of music, period. That means iTunes sells more music than WalMart's brick and mortar and online retail combined! But Apple can't sit on their laurels. The number one social network, News Corp's MySpace just announced a new online music venture with three top labels. It was just this past February that iTunes sped past Target and Best Buy to become the number two retailer. Seems only yesterday that Amazon was gonna clean Apple's clock with DRM-free music at bargain basement prices. Does Apple have any weaknesses?

Hey RIM, Modonna or Apple?

2008-04-03T13:17:00.000-07:00

RIM posted great numbers and guidance in their quarterly earnings conference call last night. Seems corporate America can't get enough of the device. But it's not just an enterprise tool anymore, seems everyone has one, as there are at least 14 million of the handsets out there.

But what's responsible for this breakout success? It seems to be a growing obsession, from the soccer field where I see moms that can barely lift their eyes from their Crackberries to watch their kids as they frantically attend to their email, to Madonna who, "sleeps with her BlackBerry" under her pillow, just in case she "remembers something during the night," as reported by the BBC.

I think that Apple deserves some of the credit as well. We've all hear of the halo effect that the iPod has had on Mac sales, well I believe the iPhone has had that same affect on the Blackberry. When people decide which smart phone to get, they aren't even considering the Razor, Treo or Nokia E90 anymore, it's either the iPhone or the Blackberry.

The iPhone has has made it a two phone race, and it's catching up quick. Soon it will overtake the Treo in the number three spot, and if the prediction by Gene Munster of Piper Jaffray are correct, looks like it will have the number one spot by the end of 2009.

So RIM, you owe Apple a bit of gratitude, unfortunately for you it looks like that gratitude will become envy.

-zach bass

ZACH BASS - Market Update

2008-04-03T11:31:00.000-07:00

You know, you gotta love this game. I mean a few days ago we get a huge breakout across the board, followed by a head fake trying to disguise itself as a selloff. Then great guidance from RIMM, apparently benefiting from the halo affect from AAPL.

Then this morning, I thought all hopes were dashed at the bulls regaining control, with the horrible earnings from GRMN and WFR. To compound my fears, a blow to the gut with the Jobs report, and just for good measure the futures were sporting a flat opening.

Then to my surprise, the market started to come to life, followed by a little side ways action, just to keep me honest, then things kept gaining strength. The bulls are trying their best to pull their balls out of their testicle lock boxes!!

Hey, we ain't out of the woods just yet. AAPL is doing fine, so are the alerts I put out there on the Yahoo AAPL message board (ORCL, DBA, BHP). But there is still an air of uncertainty in the market as a whole. I would take things light here, take profits when you can, let's sit back and wait for the next big indicator that tells us to step on the pedal.

It's up to the bulls now, they need to hold onto the support levels defined by the 50's. 12,421 (DOW), 1349(S&P) and 2330(NAZ). If we can close above those levels, it would be bullish.

-zach bass

Can AAPL Regain 200 This Year?

2008-04-03T04:08:00.000-07:00

AAPL broke $150 yesterday then retreated. For a brief moment there was a gleam in Apple Investor's eyes. We were green after a huge breakout the day before. Did the bulls finally say enough is enough to the Bears, exclaiming, it's our game now. Then our aspirations of regaining the mountain slowly and steadily diminished. Was this going to be a repeat of all the failed breakouts before, same story, different day? We crossed into the red, and kept going down. But then, at the eleventh hour, actually a bit earlier than that, the Bulls regained their composure and said, not today, not today!

Like many times before, breakouts have been dashed the following day with not just retests, but massive selloffs. But not this time, this day was different. We were still above the 50 day EMA, and above it we stayed. That was critical if our hopes of regaining the hill was to be. AAPL followed along, though near the end of the day it looked for a moment that it was loosing steam. Is the Bear market over, are we out of the woods. Not yet, not by a long shot. This is a day by day battle, without yet a victor.

The back test yesterday was very healthy for the overall market, and AAPL. This is evidenced by today's action. RIMM helped to boost Apple, with strong after hours blowout earnings. Some would argue that the cache that the iPhone has generated has breathed new life into RIM. So, if we can clear 152.55 on a closing basis, I think we'll see we'll see 160 in the not so distant future. From there, resistance is futile. We'll be hopscotching our way to 180, going from resistances marked by past gap downs.

So, what do you think? Will we hit/surpass 200 this year? And if so, how long will it take. register your opinion in my "Apple Trumps RIM" survey.

-zach bass

Armed w/iPhone Know All's Become Even More Annoying!

2008-04-01T18:58:00.001-07:00

This article in the LA Times hits home with me, because I have to admit to becoming one of these people. Help me!

Quoted from article:

"It's turned me from a really annoying know-it-all into an incredibly annoying know-it-all, with the Internet to back me up," said Sadum, a technology writer in Denver. "It's not a social advantage."

Is it Time to Jump Back In?

2008-04-01T17:55:00.000-07:00

Normally I don't recommend chasing gap ups. I had suggested yesterday to play it safe, because the market was in flux. I said sit on the side lines. At the same time I suggested that we could see a rally the next day because of the negative divergences on the 20 year bond (as well as the Yen) versus the positive divergences on the US dollar. Clearly a bullish sign. And boy did it play out. Not only was it a gap up, but it was a trend setter! Unfortunately I didn't capitalize on any new positions due to the lingering uncertainty. No fowl though, because I've been holding AAPL for the past several weeks, and it shot straight through its resistance!

So, is it time to jump back in, or not? I say yes, with a caveat that I'll explain later. I say "yes" because this was a trend setting day. All the indexes shot through their 50 day moving averages, and with gusto. The NAZ smashed through the neck line of the inverse head and shoulders pattern that has been setting up forever, and advancers left decliners in the dust! So, I would say all that combined makes for a pretty compelling story that there's great momentum left in this rally, which is no longer a rally, but an uptrend. At least for the near term. It remains to be seen if this means we have reversed the overall downtrend that began at the beginning of the year.

So, from an AAPL perspective, what's important to me? Well, to start, there's iPhone shortages propping up everywhere. There's analysts, and rumors of an early arrival of 3G. And there's that story last night about the Taiwan manufacturer that claims to have 10 million third generation iPhones ready to ship. Also, there's reports that iMacs are flying off the shelves, and RIM is reporting earnings tomorrow. If RIM does not disappoint, that's good for Apple, because it confirms a healthier than expected corporate market for iPhones. All indications are that RIM is doing very well.

Here's the caveat. Tomorrow the market will likely go up, but it will also be come very over bought if RIM reports well. The next day the oscillators are going to have to be reset. So, I anticipate a slight correction. That's the buying opportunity. As far as the AAPL position goes, if you're holding, I would trim anything approaching 152 and change. I think the following day the resetting of the oscillators should bring it back down some, maybe to 148. That would be a good time to re-enter.

Of course this is speculation, but I think that's how it will play out. If the opportunity is right, I'll put out some plays over the next couple of days, to supplement your AAPL.

-zach bass

ZACH BASS - Market Wrap Up

2008-04-01T10:46:00.000-07:00

What a great day to be a bull. Advancers are trouncing decliners with spectacular volume! We've cleared the 20 day EMA (12,310) target I pointed to earlier with strength, currently at 12,596!! It was a clean sweep on the 50s as well, the DOW (12,404), the S&P (1347 ) and the NAZ (2326). Yippee!!

Now, to recap, I called this rally early this morning, around 1 AM, dubbing it the Ying-Yang rally. The only problem was that it was too hard to see yesterday, because we were sitting in the middle of a band. And I suggested it best to sit on the sidelines. I do not regret that move, even though we missed out on a great gap up. I had been predicting a near term rally before that as well, but just didn't see it being so hard and so fast.

As always, you should use weakness to take positions.

Some notes: the NAZ is sporting a long term inverse head and shoulders pattern. The neckline is at 2348, should we cross that, I wouldn't want to be a short, cuz this thing's gonna blow!!

If we hold these levels, the trend is up. That's a wrap.

-zach bass

ZACH BASS - News: 10 Million 3G iPhones to Ship

2008-04-01T00:57:00.000-07:00

Wei Yi Lim, of the Dow Jones Newswire, reported not more than an hour ago 11:52 EST, that Taiwan's Hon Hai Precision Industry Co. is ready to ship Apple's third generation iPhones. We could see them as soon as next month! It's reported that they are only waiting on the "nod from Apple".

Whoa!! So, if they already have at least 5 million second generation iPhones in the warehouses, and add to that another 10 million new iPhones, that's 15 million iPhones in 2008!!

Just for clarification, this is not an April Fools Joke. I am a little concerned about the single source of the story, would be nice to see some confirmation. Click here for the story

Weakness Yes, Bleak OutLook, I Think Not

2008-03-31T21:20:00.000-07:00

Today was uninspiring. While there were more advancers than decliners, the lack of volume is usually a sign of uncertainty. It's a tough place to be as an investor. But patience and due diligence will win out.

One ray of hope is that there are signs out there that we may be in for a near term rally. For example, the 20 year bond put in a negative divergence today, while the US dollar rallied a bit and is sporting a positive divergence. In my experience this ying-yang usually precedes a rally.

Don't take this as a signal to go head first. On the contrary. Until the Dow can clear its 20 day EMA (12,310) on a closing basis, it's best to be a spectator, not a player.

-zach bass

ZACH BASS - Market Recap

2008-03-31T12:41:00.000-07:00

Well folks, this was an exciting day, wasn't it?

The fact of the matter is that the market is in flux, we are smack dab in the middle of a trading band on the SPY, we've got ultra low volume, and a stalemate between the bulls and bears as the bull/bear ratio has closed.

Until there's movement in either direction, things are indeterminate. For that reason, I suggest playing it very light, cash is best. If you're holding AAPL, tighten up your stops, sell/trim on strength.

We have long term resistance at about 149, which we must clear before the road to 160. If we approach 149 and bounce, take the opportunity to bank some profits.

The rest of the market is in flux as well. Just sit back and watch.

-zach bass

An Up-to-the-Minute Apple Info Source

2008-03-31T09:26:00.000-07:00

I used to subscribe to 20 - 30 blogs in my newsreader to stay abreast of breaking news. Then a friend alerted me to a website he designed in his spare time to track Apple news, as well as other topics that interested him. Click here.

He said that it aggregates over 200 of the most popular Apple-related blogs, and updates every 15 minutes. I like the design, it's clean and easy to read. There's even an iPhone version of the site at here.

-zach bass

AAPL Elliot Wave Forecast

2008-03-31T09:16:00.000-07:00

I typically use tradition technical analysis when tracking stock price movement, with primary emphasis on Volume and Price and the MACD and MFI. These are by far the best indicators of momentum and investor sentiment. The secondary indicators I use, such as RSI and Stochastics are used for confirmation of trends.

Another such confirming indicator is Elliot Wave, based on Fibonacci ratios. These ratios are found everywhere in nature, including the behavior of men in mob situations, which the securities market is an excellent model.

Well as you may know, advancing stocks generally follow a pattern of 5 waves up and 3 waves of correction, the corrective waves often referred to as abc waves. The ratios between these waves, more often than not, seem to follow these fibonacci ratios eerily close. And the the wave that investors are usually looking for, which has the best potential once confirmed, is the 3 wave up.

The THIRD WAVE is your Friend!

This is the wave that AAPL is currently exhibiting. Now third waves typically occur at one of 3 possible fibonacci multiples (.618, 1.618, or 2.618). Od course 2.618 is what we all hope for. Well, AAPL has logged a perfect fibonacci 1 and 2 wave, and is in the midst of a confirming 3 wave that has exceeded 1.618 (currently at 2.14). Which means in all likelihood, it should reach for the 2.618 peak. This equates to a target price of 152.55.

So, Zach's prediction is that the current AAPL 3 wave will reach $152.55 before correcting to and ABC which should put it at 142. Which will be the future 50 day EMA. Hmmmm.

-zach bass

Can AAPL Buck the Trend?

2008-03-31T06:29:00.000-07:00

We saw some great action in the last two weeks. The DOW had a 10 day run of almost 900 points before the Bears felt lonely and decided pay us a visit in the later part of last week. With this disappointing end, many stocks and indexes are forming bearish wedges, so it would be advisable to go light. I recommend swing traders go mostly cash... EXCEPT FOR AAPL! Damn if it's not bucking the trend!

From an overall market perspective, while it's true that the current inverted Bull/Bear ratio indicates a bullish reversal, the whipsaw action in the market makes things a bit uncertain. I recommend caution. At the same time, you just can't ignore the counter rally from AAPL! That's why I'm suggesting to hold AAPL up to earnings, and either put in some hard tight stops, or hedge your position. The market is fickle, no telling where it will go post earnings regardless of the report.

From an overall market perspective, let's be realistic, we are in a down market, there's no denying that. The DOW appears to be forming a symmetrical triangle, which is usually bullish, in a bull market. But we're in a bear market, and from experience, triangles forming in bear markets tend to be bearish. Also, the inverted hammer we put in last we is another bearish sign that we are headed for correction territory, possibly testing 11,700. If the triangle breaks down, watch out, there's little support down to 10,700.

On the S&P we started a break out, which turned out to be false. I think what actually happened over the past two weeks was a short covering rally. So, I see the S&P retesting the 1270 mark again. All in all, I'm not sure we actually found the bottom of this market. If we had, last weeks rally would have been confirmed with expanding volume. Instead, volume dwindled, and the air was let out of the proverbial tires.

So, where are we? I don't know. All I can say is that I'm cautious from an overall market perspective, but see AAPL as a shining star in a thick cloud of mirkiness. Time will tell.

-zach bass

Zach Bass and his Investment Blogging Goals

2008-03-29T08:40:00.000-07:00

Zach has been wandering the Apple Ecosystem (Apple and companies/markets affected by, or impacting Apple) for 30 years. He has seen it all from every perspective imaginable; as a technologist, teacher, consultant, user, and investor. Through these experiences, Zach has evolved into a Zen master in the art of stock investing and technical chart analysis.

As the legend goes, Zach was perusing Apple investor blogs and message boards foraging for knowledge and insight, and found himself engorged in conversations with people of fantastic variety. The discourse was energizing, but the thing that disappointed him was the dearth of agenda-laden info pumpers. It became difficult to have dialog, share analysis and experiences. So, he decided to take a more structured approach, providing regular morning and afternoon posts, that provide analysis of major markets within an AAPL context.

So now, Zach tries to provide at least two daily outlooks on the markets with a focus on the Apple Ecosystem (aka AE). Zach envisions that this structure will help normalize dialog, and prove to be a useful resource for all involved.