Saturday, September 30, 2017 -- In the days leading up to Apple's Fiscal Q3 earnings report released on August 1, 2017, the stock plummeted from a high of $153.38 to a low of $146.72 on concerns that the iPhone X was running into production issues and might be delayed. Analysts began cutting their estimates and taper back expectations for Apple's fiscal Q4 revenue guidance. If the iPhone X (called the iPhone 8 at the time), was to be delayed, then surely Apple's revenue guidance would reflect that reality. If Apple is unable to launch its new flagship 10-year anniversary iPhone before the close of fiscal Q4, it would cause everyone looking to upgrade their iPhone to delay purchasing the device until Apple's fiscal Q1 which begins sometime in late October or early November.
Long-time seasoned Apple analyst Toni Sacconaghi from Bernstein Research Group sent a note to clients around Tuesday, July 25 stating major concerns about Apple possibly delivering a massive miss on revenue guidance due to a delay in the iPhone X (again it was called iPhone 8 at the time):
While the street appears to be increasingly factoring in a delay for iPhone 8 and weak Q4 guidance, we note that only about 1/5 of analysts have lowered numbers for Q4, and we see the possibility that Apple could guide Q4 revenues $6B – $10B below cons estimates (we are at $42.7B vs. $50.4B), if there are delays with iPhone 8, which appears increasingly likely. We also encourage investors to monitor GM guidance, given the continued rise in NAND prices during the quarter and potential for a negative mix shift if the flagship iPhone 8 is delayed.
So will (potentially very) weak Q4 guidance matter? In our opinion, no – *unless* iPhone 8’s availability is pushed out past early November, in which case we believe that Apple could see incremental switchers away from iPhone, potentially undermining FY 18 numbers. A key question is what Apple might say on its conference call in the face of weak guidance.
As you can see, Toni Sacconaghi's revenue expectations for fiscal Q4 was at $42.7 billion on the expectation that the 10-year anniversary iPhone would be delayed to as late as early November. Now Toni Sacconaghi was right. The iPhone X was delayed until November or fiscal Q1. But where he was wrong is in his expectations that Apple's revenues would suffer to the tune of $8-$10 billion as a result. Now it's important to note that Toni Sacconaghi was referring to the 10-year anniversary iPhone X here as the iPhone 8. There were no rumors of delays for the "regular" less exciting iPhone 8. All of the rumors of delays were regarding Apple's iPhone X. And that's what Sacconaghi and many on Wall Street began to suspect might be delayed. Continue Reading>>>
Tuesday, September 26, 2017 -- At the open of trading of on Monday, September 25, Apple fell to a 30-RSI on the daily chart (at $149.40). This opened up a significant opportunity for investors looking to capitalize on the recent volatility in Apple's stock price. Apple is now down roughly 9.7% from its highs due in part to the "sell-the-news" bear raid that has plagued the stock since Apple introduced its 10-year anniversary iPhone X a few weeks ago.
Those who have been patiently waiting for the right opportunity to jump into Apple's stock may have just been given their chance to do so. Apple only ever enters oversold territory on very rare occasion. What's more, every time Apple has become oversold, it has resulted in a significant buying opportunity when executed together with an apropriate hedge.
Over the past 11 years, Apple's stock has become technically oversold on only 20 total occasions. That is less than once every 6-months for Apple going back to March 2006. The table below shows how Apple has traded immediately after reaching a 30-RSI on the daily chart.
When determining what is the most appropriate way to capitalize on an oversold Apple, it is important to keep in mind that this is a historical analysis of an ongoing trend. There is no guarantee that Apple will continue to follow this trend despite the fact that it goes back 11-years. There is always some level of risk that the next oversold trade doesn't follow the 11-year historical trend. Continue reading>>>