This week’s Apple trading strategies (8/2-8/6)

A place for Apple traders and investors to share their best ideas.

To get things rolling, here’s Gene Munster and a crew of CNBC commentators chewing over Luca Maestri’s forward-looking numbers as the stock tanked in after-market trading last Tuesday:

Below: Apple vs. the S&P 500 last week, normalized…

apple trading strategies 8/1/21

Disclosure: Although I am now an Apple shareholder (see Why I bought a share of Apple, my first), I am in no position to give trading advice. Don’t blame me if you drain your IRA doing something you read about here.

See also last week’s trading strategies.

17 Comments

  1. Fred Stein said:
    Gene estimates that even with supply constraints, Q4 will grow 25% YoY. Without supply constraints, he estimates $85B or 32% YoY. Either is great. Q1 2022 catches up any deferred sales.

    Apple said, that there were no constraints on the latest nodes. Paid subscribers went up 150M to 700M, 27% YoY.

    The market doesn’t ‘get it’, yet. Apple is still a bargain.

    7
    August 1, 2021
    • Gregg Thurman said:
      Sale delayed vs Sale lost. “All Aboard”, the Apple Express is departing the station.

      My personal PT remains $200 in January (but not necessarily after earnings, until market rationality returns).

      2
      August 1, 2021
  2. Paul Brindze said:
    Based on close of week plus Apple back in as a buyer I think next week or two is up. 150+ … maybe 155. My advice is worth what you paid me for it .. zero. But that is what I am planning on very short term.

    Longer term definitely up. Nice double digit growth despite over hyped “supply constraints”. Next several months could easily see 170+.

    Which is why I believe rational players should easily pay 150+ short term. Of course, this is Apple .. so we have our normal shortage of rational players.

    5
    August 1, 2021
    • Fred Stein said:
      Great points, Paul. I’d split a hair. We have a surplus of irrational players.

      We saw the rational players jump in over the last two weeks – strong volume* taking advantage of selling by the irrational players, or as Joseph Bland says, “weaker hands”.

      * 7/19, 7/28

      0
      August 1, 2021
  3. Gregg Thurman said:
    My strategy for last week worked, just not as well as I had hoped. My initial high yield purchase (using about 50% of my usual investment funds) imploded just as it did back in January, and again in April. Only this time, having held back half my investment funds (full invest is 25% of my cash) I purchased July 30 $144/$145 and $143/$145 Call Spreads, both of which paid off. When the dust had settled I lost $594 for the week, hardly enough to even bring up.

    That was my first loss in 8 weeks, an unusually long winning streak basing 5 years of data. Historical loss rate is 23%.

    So what am I going to do this week? Until I’m assured that the market has retuned to some semblance of rationality I’m going to buy deeper in the money (lower yield) than I normally do, hoping to profit a little vs losing again. Even profiting a little will be more than enough to cover last week’s loss AND buy me a shirt. : )

    1
    August 1, 2021
    • Jacob Feenstra said:
      Yes, Gregg, buy a shirt… and, more importantly, wear it before you switch on zoom.

      2
      August 1, 2021
    • Paul Brindze said:
      I went essentially “at the money” this week. Sold 145-146 put spreads. Otherwise hold my long term stock position (added a little last week when down) and still have some Aug 17 calls .. will probably sell those this week.

      0
      August 1, 2021
  4. Fred Stein said:
    The last ten years of AAPL shows shorter and shorter downturns suggesting two things.

    1) The Apple-is-doomed meme has lost its power because the all supporting ideas have been debunked.
    2) More investors see that every downturn is a buying opportunity, maybe the best they’ll every get.

    6
    August 1, 2021
    • David Emery said:
      Yeah… It seems “Apple is doomed” has been replaced with “Apple cannot keep on being this successful.” Or, a return to the discredited “theory of large numbers” as a limit on growth.

      2
      August 1, 2021
      • Paul Brindze said:
        But “Apple is doomed” will always retain its humor value for those of us who profited from it. 🙂

        4
        August 1, 2021
    • Gregg Thurman said:
      1) The Apple-is-doomed meme has lost its power because the all supporting ideas have been debunked.
      2) More investors see that every downturn is a buying opportunity, maybe the best they’ll every get.

      Anti-fragile

      1
      August 1, 2021
  5. David Emery said:
    Part of the problem is that Apple provided some supply chain concerns -for the next quarter-. I didn’t interpret that as Apple saying those concerns were permanent or even sustained. But Wall St ANALysts are looking at this as if it is a permanent constraint on Apple’s future sales.

    On the lack of specific numeric guidance, I think Horace has it right. One Apple decides they can see the end of COVID impacts, they’ll provide guidance based on confidence in predicting sales and costs. I’m guessing, by the way, that the transportation costs caught them a bit by surprise.

    1
    August 1, 2021
    • Bart Yee said:
      @David Possible supply constraints suggest that Apple can sell every one of the units they can make due to demand, only they can’t make as many as they’d like to. Normally prices would then go up.

      OTOH, when supply constraints ease, Apple will still sell every unit they can make assuming they don’t make too many (supply > demand), and if component costs drop due to more plentiful supply (iffy supposition), prices drop or profits go up.

      My sense is Apple’s mitigation efforts will blunt most of the supply issues for at least one or two quarters, especially launch quarters. I wouldn’t even be surprised to see them incorporate scarce chips directly into their silicon if they are able to license these older designs.- paying for a license beats not having the chips.

      Otherwise, hardware profit margins may take a slight hit as component costs climb slightly, maybe offset by saving via Apple Silicon, especially now older and amortizing A12, A13, and now A14, M1 chips. As OLED supply gets 2-3 suppliers, this cost may also improve. Rumored titanium chassis for some iPhone models may cost more though.

      However, rising Services revenues can improve margins as we saw with the last quarter.

      1
      August 2, 2021
      • Gregg Thurman said:
        @David Possible supply constraints suggest that Apple can sell every one of the units they can make due to demand, only they can’t make as many as they’d like to.

        Bravo. To that end, Luca said revenue would grow “very strong double digits (YoY)”.

        0
        August 2, 2021

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