Premarket: Apple is green

apple premarket green 10-19-21From the Wall Street Journal’s "Stock Futures Edge Higher Ahead of Major Earnings" posted early Tuesday:

U.S. stock futures ticked up ahead of a slew of earnings that investors will parse for insight into how companies are faring with inflation and supply-chain disruptions.

A spate of companies are due to report quarterly earnings ahead of the market open, including Johnson & Johnson, Bank of New York Mellon, Travelers, Procter & Gamble and Philip Morris International. Netflix will report earnings after the closing bell.

Investors are using earnings and companies’ guidance for the future to assess how corporations are faring with a number of issues. Inflation is expected to be stickier than originally anticipated by central-bank officials, exacerbated by continued supply-chain disruptions, higher energy costs and labor shortages. About 81% of S&P 500 companies that have reported so far have beat earnings-per-share expectations, according to FactSet data through early Monday.

“It is a market now where you’re going to see more differentiation because it is a more challenging environment,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “If you look at earnings so far, ex-financials, it’s been very good.”

My take: Eight more trading days before Q4 earnings. Max pain is still stuck at $141, but there's a mountain of calls at $150.

apple premarket green 10-19-21


  1. It may not result in any long-term changes but the SEC fired a few shots across the bow at Robinhood, meme trading and short-sellers yesterday. Here’s 2 important points:
    3. Trading in dark pools and through wholesalers. Much of the retail order flow in GME was purchased by wholesalers and executed off exchange. Such trading interest is less visible to the wider market—and payments to broker-dealers may raise questions about the execution quality investors receive. Further, though wholesalers increasingly handle individual investor order flow, they face fewer requirements concerning their operational transparency and resiliency as compared to exchanges or ATSs.
    4. Short selling and market dynamics. While short selling and calls on social media for short squeezes received a great deal of media attention, the interplay between shorting and price dynamics is more complex than these narratives would suggest. Improved reporting of short sales would allow regulators to better track these dynamics.

    October 19, 2021
  2. Bart Yee said:
    Over the last month, AAPL reached an intraday low of about $138.42 or so on October 4th. That was -12% below rough intraday and closing high or $157, indicating “correction” territory for headline grabbing media. Typical Apple doom and gloom predictions followed in light of supply chain, chip shortages, and inflation fears – fed policy tapering – you name it concerns. Yet today, AAPL closed at $148.76, now down only -5.25% from ATCH, smartly recovering almost 7% in 2 weeks.

    Meanwhile, Apple has extended demand and upsold sales for iPhone 13 models, now clear demand for premium MacBook Pros with M1 Pro and Max chips, and has weathered much of the chip shortage storm so far. Given steady growth of new iPads and Apple Watch 7, IMO it’s clear to me and anyone with open eyes that Sept. quarter earnings will be superior, and Q1 FY2022 mind blowing!

    All the while during this short lived drop, Apple has been buying back shares at 6-12% discount, despite any potential “blackout period”. If Apple were to follow its predetermined buying patterns, I’d expect $6B to $8B worth of shares bought back out of $17-24B total for the current Dec. quarter.

    Here is the relevant wording from Q3 2021 10Q:

    “As of June 26, 2021, the Company was authorized to purchase up to $315 billion of the Company’s common stock under a share repurchase program (the “Program”). During the nine months ended June 26, 2021, the Company repurchased 515 million shares of its common stock for $65.5 billion, including 32 million shares initially delivered under a May 2021 accelerated share repurchase agreement (“ASR”), bringing the total utilization under the Program to $234.1 billion. The Program does not obligate the Company to acquire any specific number of shares. Under the Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).“

    If we assume an average YTD quarterly purchase of ~$21-22B in the Sept. Quarter, we will have seen a total of $87B worth of shares over the past FY, leaving ~$212B to be spent in the current repurchase program, notwithstanding any new authorizations. I fully expect another ~$20B to be spent in Q1 for share buybacks starting with $6-8B in this earnings reporting month of October.

    October 19, 2021

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