Premarket: Apple is red

apple premarket red 10-20-21From the Wall Street Journal’s “Stock Futures Waver Ahead of Big Tech Earnings” posted early Wednesday:

U.S. stock futures wobbled ahead of corporate results that will provide insight into the effects on the technology industry of inflation and supply-chain disruptions, including from the global chip shortage…

Telecommunications giant Verizon is scheduled to post earnings before the opening bell. Tesla and IBM are expected to report after markets close.

Stocks have climbed in recent days as investors parsed strong earnings. Major companies have said that labor shortages, higher raw-materials prices and supply-chain issues haven’t eroded profits substantially, reassuring investors.

For tech companies like the ones reporting Wednesday, investors will be watching for an update on disruptions in the semiconductor space and the ability of large firms to increase prices to consumers, according to Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management.

“Markets are taking a bit of a breather after a very strong run. Earnings are very good so far, across a pretty broad range. We’re looking out for margins, and comments on input costs, and we haven’t really seen too much concern on that,” he said. “This is what’s really been supporting the rally.”

My take: Yahoo!Finance sees a bullish commodity channel index pattern. Max pain inched up to $142 from $141 overnight.

UPDATE: Since this was posted, max pain slid up to $145. More likely a delayed update at maximum-pain.com than a burst of premarket option sales.

 

apple premarket red 10-20-21

13 Comments

  1. Jerry Doyle said:
    “…. Major companies have said that labor shortages, higher raw-materials prices and supply-chain issues haven’t eroded profits substantially, reassuring investors.”

    One notable factor I observed from the recent “Unleashed Event,” was Apple’s lack of reticence related to pricing increases. The price of the new 16 in. MacBook Pro increased by 4%, entry-level AirPods by 13% and 54% for the new 14 in. MacBook Pro compared with the previous 13 in. model. Apple continues to instill confidence in me that they do not expect the higher prices (meaning increased margins) to soften demand. We are going to see in the coming quarters ever increasing continuing robust, eye-popping numbers that can’t help drive Apple’s stock price to $175 in the short term and $200 in 2022.

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    October 20, 2021
    • Gregg Thurman said:
      We are going to see in the coming quarters ever increasing continuing robust, eye-popping numbers that can’t help drive Apple’s stock price

      Ordinarily that’s what you would expect, but that isn’t what we have seen from the last 3 post earnings reports.

      Hoping I’m wrong and you are right this time around.

      2
      October 20, 2021
      • Gregg, I do believe we saw a recent reversal in the ridiculous but persistent “Buy the rumor, sell the news” phenomena. The MacBook Pro product announcement news may have triggered a “buy the news” uptick. Apple’s excellence in chip design and ability to deliver the new products the following week impressed many investors. Then again this could be the run-up to earnings so typical of recent quarters. Forward Earnings, always a matter of looking into non-existent crystal balls, sure look more likely to grow at Apple than the other major tech investments.

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        October 20, 2021
    • Bart Yee said:
      @Jerry
      Shouldn’t your comment read this way?

      We are going to see in the coming quarters ever increasing continuing robust, eye-popping numbers that can’t help but drive Apple’s stock price to $175 in the short term and $200 in 2022.

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      October 20, 2021
  2. Greg Lippert said:
    Apple also has the prior generation of AirPods available with no price increase. It provides differentiation – not just a price hike – for 13% more you get a new design, spacial audio, better sound and other niceties. It’s easy to spot the advantages of AP3.

    Thats called good marketing.

    2
    October 20, 2021
  3. David Emery said:
    If Apple has locked in its supplies at a fixed cost, they’ll still have to pay transportation increases to move those supplies around. I would not be surprised to hear Tim or Luca say that in the earnings presentation.

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    October 20, 2021
  4. Today’s fever chart shows the wax melting on Apple’s wings whenever the share price gets too close to that mountain of $150 calls. (Pardon the mixed metaphor.)

    1
    October 20, 2021
    • Bart Yee said:
      When will those options expire?

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      October 20, 2021
      • Gregg Thurman said:
        There is a $150 Call wall for the OCT 22 Weeklies, OCT 29 Weeklies and November 5 Weeklies. It disappears with the NOC 12 Weeklies.

        I think the hesitance to buy higher Strikes or push current prints higher is past WS response to Apple’s earth shaking earnings blowouts. A lot of investors got massively burnt by those irrational responses. Three times burnt, once cautious is in play.

        In response to Thomas’s observation that we didn’t experience sell the news this event cycle. I agree. That was part of my decision to go long the NOV 19 Call at $150 a few weeks back, then sell short term Calls against that position.

        I didn’t foresee the significant and very positive response to the M1X reveal, so the OCT 29 $150 Calls I sold just before Monday’s event started, are going to cause the whole kit and kadoodle to be exercised (Called away) on the 29th. Not to worry, the cumulative ROI on the defensive strategy will yield ~130% profit to me.

        I am looking to modify my Weekly strategy to selling long term Calls, then selling short term Calls against them because of this. I have been using my data base of daily prints to back test the strategy modification. It looks really good. I’ll post more on this later.

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        October 20, 2021
        • Gregg Thurman said:
          buy higher Strikes or push current prints higher is past WS response to Apple’s

          Should read: “ buy higher Strikes or push current prints higher is due to past WS response to Apple’s”.

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          October 20, 2021
  5. Gregg Thurman said:
    @PED: That call wall has already tumbled at least once.

    Call walls, like the so-called Max Pain, are not static. To the contrary they move in response to investor sentiment, another reason I use ISM (Investor Sentiment Multiplier) in lieu of PE. ISM is so much more descriptive of what the dynamics of value are than Price to Earnings ratio. It helps me understand what is happening more clearly.

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    October 20, 2021

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