As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
September 24, 2013
Fiat Lux
Featured Trade:
(APPLE?S BLOWOUT NUMBERS SEND BEARS SCAMPERING),
(AAPL), (QCOM), (CHL), (SSNLF), (MSFT), (GOOG),
(EXPIRATION OF MY YEN BEAR PUT SPREAD),
(MY PERSONAL LEADING ECONOMIC INDICATOR),
(NOTICE TO MILITARY SUBSCRIBERS)
Apple Inc. (AAPL)
QUALCOMM Incorporated (QCOM)
China Mobile Limited (CHL)
Samsung Electronics Co. Ltd. (SSNLF)
Microsoft Corporation (MSFT)
Google Inc. (GOOG)
Apple?s (AAPL) report this morning that it sold a stunning 9 million model 5s and 5c iPhones has bowled over even the company?s most optimistic cheerleaders and sent the bears running. The consensus estimate had been only for 5 million units. At the opening highs, shares were up $30 to $497, well above the $468 that prevailed at my September 11 Trade Alert to buy the calls.
The blowout success emboldened Apple to substantially raise its Q4 guidance. Forecast revenues were quickly taken up from $34 to $37 billion, while margins edged up from 36% to 37%.
Analysts complained that the company muddled the numbers by simultaneously launching two new phones and retiring one. Certainly that generated some Apples to orange comparisons (no pun intended!). But the bottom line here is that this was a spectacular launch.
There are a number of reasons why both the analyst community and Wall Street got this so wrong. For an incremental upgrade, so many improvements were unleashed at once that it took some time to digest them all.
The iOS 7 64 bit operating system on the new A7 chip, the first ever for a smart phone, substantially boosted speeds, up to ten times for some functions for long suffering iPhone 4 owners. The iSight camera makes a generational leap to a very fast 8 megapixels. Other improvements came through for hundreds of other applications, which I am still trying to figure out. It?s like having to learn how to use an iPhone all over again, so save your upgrade for a free weekend.
Entire new business lines were introduced with barely any notice, like the free Internet radio service, which saw an amazing 11 million unique listeners sign up during the first few days. The agreement with Japan?s NTT Docomo to offer iPhones was hugely overlooked. With 60 million high earning customers, it makes the China Mobile (CHL) now show almost an irrelevance. Even without a (CHL) deal, consumers can now simply buy a 5c for $475 and connect to the domestic network for the first time.
Apple is still the fastest smart phone by miles, according to the chart below, beating the pants off of Google?s Android (GOOG), the Samsung Galaxy (SSNLF), and the Windows smart phone (MSFT). This is a crucial element in the company maintaining its premium pricing. Consumers don?t want to start collecting Social Security by the time their next page loads. If you are a fast typist, unlike me, you can hit the keys faster than the other operating systems? ability to process the commands, muddling the text.
It didn?t hurt that a staggering 200 million customers downloaded the new iOS 7 since last week, reminding us once again of the firm?s dominance in this space. Now we learn that several car manufacturers are going to build in iOS 7 into new models coming out next year. Apple is muscling into huge markets that no one else is even thinking about now. That?s another potential 30 million unit a year business.
I think we are 5 months into a 17 month leg up in Apple stock since it bottomed on April 21 at $380. In the wake of the 5s and 5c launch, we will probably trade in a range from $460 to $525. We will then break out to the upside in the new year, spurred on by another raft of new product launches for the iPad and iMac that could take us as high as $600.
A second period of digestion will follow. Then the prospect of an iPhone 6 launch in September 2014 should return us to the old high of $707. That gives you a potential gain in the stock from this level of 44%.
The company is putting its money where its mouth is. During a long, tedious summer, when its shares were trading in the low $400?s, it was the major buyer. The bulk of its $50 billion war chest is still in place to buy the dips.
I never believed the ultra bears, who seemed to berate the firm for its successes as much as its failure (iMaps, etc.). Downside targets have gone as low at $250 a share.
I have never been one to hold back from throwing rocks at the establishment. But this is a company that is making net profits of $14 million an hour, and they want to sell it short? If they were based in California, I?d say they were smoking something. Oops, they are based in California.
Short? What?s a Short?
Add this one to the ?WIN? column.
I strapped on this position because I believed that the world was adding risk, expecting major bull moves, once it becomes clear that the multiple disasters now threatening the world don?t actually happen. The list includes war with Syria, the taper, the Bernanke replacement, the debt ceiling crisis, another sequester, yada, yada, yada.? A yen short is one of many ways to achieve this.
This is why US stocks refuse to sell off in any meaningful way. We are setting up for a great ?buy the rumor, sell the news? event. Remember when the first Gulf War started in 1991? Stocks drifted for six months in the run up, then soared once the bombs actually fell. We could be in for another one of those. That would take the yen and the euro to new lows for 2013.
Count on President Obama to draw out the Syria crisis for as long as possible. This gives the message of the coming military action the greatest political impact internationally. It also boosts his own political fortunes at home, leaving the Republicans drifting in the wind. Why be in a hurry to end it? They are now in the uncomfortable position of having to turn pacifist, after supporting Middle Eastern wars with a blank check for the last 11 years.
All of this worked out exactly as expected for our yen short, which is why it expired on Friday at its maximum value. The expiration print of $98.35 cleared our nearest strike of $103 by miles. This added a welcome $1,330 in profits to our $100,000 model trading portfolio for 2013.
On to the next one.
Kaching!
One of the joys of having small children is that you get to know the guy at the local plumbing supply shop really well. It?s amazing what will fit down a toilet these days.
He once told me that when Troll Dolls hit the market, every plumber in the country was guaranteed a job for life. When I went there yesterday I thought I?d pick up some leading economic indicators as well. After a deadly year, business is picking up a bit. Sure, it is still down from the onset of the Great Recession five years ago, but there is a definite improvement going on.
This was the Eureka moment! His comments confirm the sort of modest recovery I have been expecting. We aren?t going to zero anymore, but it is not exactly off to the races either. Throughout the nineties, a salesman at Circuit City (RIP) walked me through every generation of technology, and he was worth his weight in gold. All I had to do was buy a new TV from him every year, and they kept getting bigger and more expensive. I bought the second high definition TV sold in California, after George Lucas, who I used to run into at the local IHOP having breakfast with an aspiring young starlet. It was his casting couch.
Sometimes figuring out the direction of the economy is as simple as going down to the local butcher, baker, or candlestick maker and asking. They are on the front lines of economic activity, and they will see any changes months before those of us glued to computer screens. Make it your own unfair advantage, your own heads up in the marketplace. Just keep your eyes open and observe.
Asking George Lucas also helps.
A Troll Doll
To the dozens of subscribers in Iraq, Afghanistan, and the surrounding ships at sea, thank you for your service! I think it is very wise to use your free time to read my letter and learn about financial markets in preparation for an entry into the financial services when you cash out. Nobody is going to call you a baby killer and shun you, as they did when I returned from Southeast Asia four decades ago.
I have but one request. No more subscriptions with .mil addresses, please. The Defense Department, the CIA, the NSA, Homeland Security, and the FBI do not look kindly on newsletters entering the military network, even the investment kind. If you think civilian spam filters are tough, watch out for the military kind! And no, I promise that there are no coded secret messages embedded with the stock tips. ?BUY? really does mean ?BUY.?
If I did not know the higher ups at these agencies, as well as the Joint Chiefs of Staff, I might be bouncing off the walls in a cell at Guantanamo by now. It also helps that many of the mid-level officers at these organizations have made a fortune with their meager government retirement funds following my advice. All I can say is that if the Baghdad Stock Exchange ever become liquid, I?m going to own it.
Where would you guess the greatest concentration of readers The Diary of a Mad Hedge Fund Trader is found? New York? Nope. London? Wrong. Chicago? Not even close. Try a ten-mile radius centered on Langley, Virginia, by a large margin. The funny thing is, half of the subscribing names coming in are Russian. I haven?t quite figured that one out yet.
So keep up the good work, and fight the good fight. But please, only subscribe to my letter with personal Gmail, Hotmail or Yahoo addresses, or with your spouse?s address. That way my life can become a lot more boring. Oh, and by the way, Langley, you?re behind on your bill. Please pay up, pronto, and I don?t want to hear whining about any damn budget cuts!
I Want My Mad Hedge Fund Trader!
?I?d much rather have the Wicked Witch of the East go away. We?d be way better off if we ended quantitative easing real fast so this scapegoat can get behind us,? said Ken Fisher of Fisher Investments.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more