(AAPL) Archives

Apple is Ready to Explode

You have to be impressed how Apple shares have been trading during the Washington shutdown and the debt ceiling crisis. While other highflying technology stocks have crashed and burned, Apple has held like the Rock of Gibraltar. Is this presaging much better things to come?

After the bar was set extremely low in the run up to the iPhone 5s launch, there has been an onslaught of good news. The first weekend sales came in at a staggering 9 million units, nearly double analyst forecasts. That?s a lot of units to be wrong by.

This has led to a series of broker upgrades by Cantor Fitzgerald, Cowen & Co., Piper Jaffray, Sanford Bernstein, and most recently by Jeffries. Entrenched bears are slowly an inexorably turning into bulls. Targets range up to $780.

During the summer, when the shares were trading in the low $400?s, Apple emerged as the largest buyer of its own stock. Still, it only made a dent in the $60 billion the company has dedicated to the program.

Of course, corporate raider and green mailer Carl Icahn (he lived in my building in Manhattan and was always a bit of a jerk) wants Apple to buy $160 billion of its stock, about $36% of the total market capitalization. But with a position of only $2 billion, Carl doesn?t have enough skin in the game to get anything more than a free dinner from CEO Tim Cook. Still, the more Icahn bangs the drum about the value of Apple, the more money he sucks in. His blustering has probably added about $50 to the stock price. That works for me.

Like the Origin of the Universe and the 105-year long losing streak suffered by the Chicago Cubs baseball team, the cheapness of Apple shares is one of those mysteries that baffle investors. Sure, you?d expect some natural profit taking after the meteoric 15 year run in the shares, from $4 to $707. But 46% is a lot, and many would say too much.

The company earns an eye popping net profits of $3.5 million per business hour (click here for the most recent quarterly announcement). Some one-third of it capitalization, or $150 billion, sits in cash in European bank accounts. That works out to $165 of the current $490 share price. This brings the ex cash trailing price earnings multiple down to a subterranean 11.8 times, or a 25% discount to the 16X market multiple. The dividend yield of 2.5% still exceeds that of the ten year Treasury bond. This is absurdly cheap.

Anyone who makes their living looking at the numbers has been loading up on the stock for the past eight months. Even permabear and short seller, Jim Chanos, has been buying on the theory that both Apple and competitor Samsumg together have been demolishing the Wintel architecture.

I think there is something important going on here. Apple is bringing out the next generation iPad in two weeks. Product refreshes for the iMac, Macbook, and Airbook in coming months are already well known. Every time an announcement of an announcement is made, the stock spikes $10.

But the 800-pound gorilla in Apples earnings stream is the iPhone, which accounts for more than 70% of its profits. The wildly successful 5s and 5c launches will take total smart phone sales from around 36 million in Q3 to at least 56 million units in Q4. The analyst community is nowhere near these numbers, so they are substantially underestimating the profitability of the company.

Apple has already cracked the China market for cash buyers with the latest upgrade of its wireless operating system. The whale here is a deal with China Mobile (CHL) with its 740 million customers, which has been to subject to on again and off again negations for years. Still, Apple has already told its manufacturers to add China Mobile to its approved carrier list.

I think the stock is beginning to discount pending the launch of the iPhone 6, which is still a distant 11 months away. That will take the company another generation ahead, with an expansive six-inch screen and a blazing fast A8 processor, leaving competitors in the dust. The business is so big that my favorite airline, Virgin America, has initiated nonstop service from San Francisco to Austin. I?m told the plane is always full.

All of this leads me to believe that Apple will be a major mover in 2014. The chip shot is $600, and we get a real head of steam into the iPhone 6 rollout, we could match the old high at $707. You can buy the stock here with some conform. If you are hyper aggressive, try playing the weekly call options on the next breakout. The more cautious can settle for the Technology Select Sector SPDR ETF (XLK), or the ProShares Ultra Technology 2X leveraged ETF (ROM). Apple has major weightings in both of these ETF?s.

So Where is the Power Button On This Thing?

Apple?s Blowout Numbers Send Bears Scampering

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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?

Buy Apple on the Dip

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Buy the rumor, sell the news. That was again the lesson of yesterday?s new product launch, where Apple (AAPL) rolled out their new premium 5s and low-end 5c iPhones. So many commentators heaped such abuse on the company in the run up to the release that today?s weakness was a sure thing.

Failure to announce a deal with China Mobile (CHL) in Beijing last night was the immediate reason for today?s $30 plunge, which prompted several houses to downgrade the stock. It was a classic ?closing of the door after the horses have bolted? moment. As with time immemorial, your broker is asking you to buy high and sell low, delivering to you a perfect money destruction machine.

However, this time, there is far more than meets the eye. China Mobile wasn?t the barrier to greater access to gargantuan 700 million mobile users. It was compatibility with China?s unique 3G TD-SCMA networks. The new plastic? $99 iPhone 5c bridges that gap.

Chinese customers can now buy the iPhone 5c retail unsubsidized, as are 70% of the mobile phones in the Middle Kingdom, and use them on the local China Mobile network for the first time. Analysts expect this will enable Apple to pick up 6% of China?s mobile market share immediately, much at the expense of rival Samsung. The full China Mobile subsidy package, which the uninformed and non-technical have been looking for, could still be years off, but has been rendered irrelevant by Apple CEO, Tim Cooks, move.

The reality is that Apple?s unit sales will remain stable, or even grow modestly, with no new products whatsoever, its marketing presence is so overwhelming. So the next version of the Mac Book Pro and iPad, due out in coming months, can only deliver upside surprises on profits. Expanded carrier distribution, better ASP?s, and higher margins will be the inevitable result.

The company also has plenty of room to cut prices and build market share as existing products, like the iPhone 4 and 4s, age. It?s clear that the ultimate low end entry point for Apple products will be the iWatch, to be launched early next year.

The net net here is that Apple?s earnings estimates will be revised up for the first time in more than a year.

This is happening with the additional rocket fuel of a massive $50 billion share repurchase program that continues unabated. Corporate raider and major shareholder, Carl Icahn, is trolling in the background demanding more.

It also helps that the company carried off one of the largest corporate bond deals in history at the absolute peak in the bond market five months ago, a brilliant move that resulted from no small amount of prodding from me.

My tumultuous personal life aside, I am entering this trade cautiously as usual, adding a deep in the money call spread that limits my risk. Note too on the chart that the strikes align nicely with major support levels that should provide an extra safety margin. These only have to hold for five weeks for the October expiration to work.

Take a look at the China Mobile (CHL) chart as well, which will go ballistic if the China recovery story is real.

The Bipolar Economy

Diary, Newsletter

Corporate earnings are up big! Great! Buy! No wait! The economy is going down the toilet! Sell! Buy! Sell! Buy! Sell! Help! Anyone would be forgiven for thinking that the stock market has become bipolar.

There is, in fact, an explanation for this madness. According to the Commerce Department?s Bureau of Economic Analysis, the answer is that corporate profits accounts for only a small part of the economy. Using the income method of calculating GDP, corporate profits account for only 15% of the reported GDP figure. The remaining components are doing poorly, or are too small to have much of an impact.

Wages and salaries are in a three decade long decline. Interest and investment income is falling, because of the low level of interest rates and the collapse of the housing market. Farm incomes are up, but are a small proportion of the total. Income from non-farm unincorporated business, mostly small business, is unimpressive.

It gets more complicated than that. A disproportionate share of corporate profits are being earned overseas. So multinationals with a big foreign presence, like Apple (AAPL), Intel (INTC), Oracle (ORCL), Caterpillar (CAT), and IBM (IBM), have the most rapidly growing profits and pay the least amount in taxes. They really get to have their cake, and eat it too. Many of their business activities are contributing to foreign GDP?s, like China?s, much more than they are here. Those with large domestic businesses, like retailers, earn far less, but pay more in tax, as they lack the offshore entities in which to park profits.

The message here is to not put all your faith in the headlines, but to look at the numbers behind the numbers. Those who bought in anticipation of good corporate profits last month, got those earnings, and then got slaughtered in the marketplace.

Buyer beware.

Only Buy Companies You Hate

Diary, Newsletter

Dilbert cartoonist Scott Adams argues that you should invest in companies you hate because only the most unprincipled and rapacious firms make the greatest profits.

Moral bankruptcy is a great leading indicator of success, and the best ones can get you to balance your wallet on the end of your nose and bark like a seal, as you buy products that you utterly despise. Companies with the work ethic of a serial killer, like British Petroleum (BP) come to mind, but you can also add other firms to the list, like Goldman Sachs (GS), Citicorp (C), Pfizer (PFE), and Altria (MO).

Adams initially started investing in companies he loved, like Enron, WorldCom, and Webvan, and absolutely lost his shirt. Adams? advice to BP is not to waste money on artificially sincere ad campaigns apologizing, but get us to hate them more. Bring on more dead bird pictures!

Who is Adams about to hate next? Apple (AAPL), because he irrationally craves their products, resents their emotional control over his entire family, can?t get ITunes to work, and is appalled by those aloof black turtlenecks that Steve Jobs used to wear.

The Worst Trade in History

Diary, Newsletter

Say you owned 10% of Apple (AAPL) and you sold it for $800 in 1976. What would that stake be worth today?

Try $22 billion. That is the harsh reality that Ron Wayne, 76, faces every morning when he wakes up, one of the three original founders of the consumer electronics giant. Ron first met Steve Jobs when he was a spritely 21-year-old marketing guy at Atari, the inventor of the hugely successful ?Pong? video arcade game.

Ron dumped his shares when he became convinced that Steve Jobs? reckless spending was going to drive the nascent start up into the ground, and he wanted to protect his assets in a future bankruptcy. Co-founders Jobs and Steve Wozniak each kept their original 45% ownership. Today Job?s window?s 0.5% ownership is worth $1.5 billion, while the Woz?s share remains undisclosed. Ron designed the company?s original logo and wrote the manual for the Apple 1 computer, which boasted all of 8,000 bytes of RAM (which is 0.008 megabytes to you non-techies).

Today, Ron is living off of a meager monthly Social Security check in remote Pahrump, Nevada, about as far out in the middle of nowhere you can get, where he can occasionally be seen playing the penny slots.

SkyBridge Capital?s Anthony Scaramucci on Hedge Fund Radio

Diary, Newsletter

Markets are overbought now, especially given that the US economy is only growing at a subpar 2% annual rate. But the S&P 500 (SPY) will close higher by yearend. Despite the fact that 30-year Treasury prices (TLT) are near all time highs, there are still huge opportunities in the fixed income space. And both the Japanese yen (FXY) (YCS) and the Tokyo stock market (EWJ) (DXJ) have more to run.

These were a few choice investment nuggets I gleaned from my wide-ranging interview with my friend, Anthony Scaramucci. Anthony is the founder and managing partner of SkyBridge Capital, a leading fund of funds for alternative investments. To learn more about SkyBridge Capital, please go to their website at http://www.skybridgecapital.com/.

After getting a law degree from Harvard, he started his investment career at Goldman Sachs in 1989, where he spent 7 years in the wealth management division. He went on to start his own money management firm, which he sold to Neuberger Berman in 2001. When Lehman Brothers bought Neuberger Berman in 2003, Scaramucci spent a short stint there as managing director of its Investment Management Division.

Anthony is the author of two books: The Little Book of Hedge Funds: What You Need to Know About Hedge Funds but the Managers Won?t Tell You and Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul.

Scaramucci is focusing his heaviest weighting in fixed income strategies that benefit from improving credit ratings in the US real estate market and low prepayment rates. This brilliant, reasonably well risk adjusted strategy is earning him 11%-13% annual returns, or 5-7 times the cash flow of ten-year Treasury bonds.

Anthony has been consistently negative on gold, which makes him look like a genius for the past two years. He has a small weighting in emerging markets, which offer higher risk and volatility, but potentially greater returns. His picks there include the Southeast Asian nations of Indonesia (IDX), Singapore (EWS), and Malaysia (EWM).

He thinks Apple (AAPL) is very cheap, but is facing an innovation headwind. Still, investors in Steve Jobs? creation should do well over the long term.

SkyBridge Capital uses 28 sub managers to generate outsized market returns. He came out ahead by 20% in 2012 and is up 9% so far this year. It has won awards for the best fund of funds with over $1 billion in assets for the last three years in a row. The firm now has over $7.7 billion in assets under management or advisement.

Anthony?s team of professionals does all the spadework in finding great managers, doing the due diligence, and cross hedging exposures. He charges 1.50% management fee, but last year earned back 77 basis points for his clients in manager discounts. So on a net basis the fees are really quite reasonable.

New investors can open an account for as little as $50,000. This is a big deal because some of the best managers have minimums as high as $10-$15 million. It is the only way the little guy can get access to the best of the best. Customers must be accredited investors with at least $200,000 in annual income and a net worth of over $1 million.

Anthony comes across as polished and erudite, yet cautious. He clearly spends a lot of time thinking about how to invest other people?s money.

As if Scaramucci didn?t have enough to do, he devotes much energy to organizing the SkyBridge Alternatives Conferences, the annual Woodstock for the high and the mighty of the hedge fund industry. The most recent event in Las Vegas presented heavyweight hedge fund legends Paulson & Co.?s John Paulson, Third Point?s Daniel Loeb, and Omega?s Leon Cooperman (click here for my coverage of this love fest).

I will be attending the next SkyBridge Alternatives Conference in Singapore during September 24-27, 2013 (click the link http://www.saltconference.com/saltasia2013/). Former Treasury secretary, Tim Geithner, and the last European Central Bank president, Jean-Claude Trichet, will be the keynote speakers.

To learn the precise details of the SkyBridge high return strategy, please follow the instructions for downloading the full interview below. There you can also get his list of the best US stocks to buy in the current environment.

Just go to the AUDIO menu tab and click on the pull down menu for RADIO SHOW (click here for the link at http://madhedgefundradio.com/radio-show/). Click on the green BUY NOW button and complete the order form. A blue link will appear telling you to ?click here to proceed?. Then click on the small blue box with the question mark inside to download. Hit the PLAY arrow to listen. You can pause, fast forward, or rewind at any time. Given the quality of the information you will obtain, the $4.95 price is a bargain.

To buy The Little Book of Hedge Funds at a discounted Amazon price, please click here. To buy Goodbye Gordon Gekko, please click here.

SkyBridge Capital?s Anthony Scaramucci on Hedge Fund Radio

Old Tech?s Big Comeback

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Apple blew away the bears today with the issuance of $17 billion in bonds, the largest such corporate debt issue in history. Spread over two, five, ten, and 30 years, the deal was oversubscribed by more than 3:1, with $40 billion in demand left unfilled.

Foreign investors took down a major part of the deal, which explains Deutsche Bank?s senior role in the syndicate. The yield on the ten-year bonds came in at 2.40%, a mere 70 basis points over equivalent US Treasury paper.

The mega deal, dubbed ?iBonds? by traders, underlies the tremendous shortage of high-grade fixed income securities worldwide. Since 2007, the amount of double ?A? or better rated paper has declined by 60%, thanks to widespread downgrades inspired by the newfound religion of the ratings agencies.

As I never tire of pointing out at my strategy luncheons and lectures, the principal sin of governments is not that they are borrowing too much money, but not enough. This has given us a global bond shortage that has taken returns to insanely low levels. Look no further than the ten-year yield of 1.68% in the US, 1.20 % in Germany, and a pitiful 0.60% in Japan.

The issue also highlights the sudden fascination of all things Apple since its better than expected calendar Q1 earnings report last week, with $43 billion in revenues spinning off $9.5 billion in profits. Since then, we learned that the richest man in Russia, Alisher Usmanov, soaked up some $100 million of stock close to the $392 bottom. This is a man who?s proven track record of market timing is uncanny.

It doesn?t require a lot of imagination to figure out what this deal is all about. With $145 billion in cash on the balance sheet, why borrow another $17 billion? The reality is that this is a way of repatriating, through the back door and tax-free, some of the estimated $100 billion in cash the company has parked in offshore bank accounts.

What will it do with the money? How about buying back $17 billion worth of stock? Buy borrowing at 2.4% and retiring 3.2% dividend stock, the yield pick up on the transaction comes to $136 million a year. That goes straight to the bottom line. The deal reminds me of the kind of financial engineering that dominated Japanese finance during the late 1980?s. When I was a director of Morgan Stanley, I signed many of these multi billion dollar deals as a co-manager.

It wasn?t just Apple that has returned from the grave, which saw its stock rise by 14% since last week?s two year low. Look at many of the old tech warhorses, like Microsoft (MSFT), Applied Materials (AMAT), Hewlett Packard (HPQ), and Intel (INTC), which have blasted forth from long moribund levels in recent weeks.

Which raises an interesting possibility. What if the long predicted selloff in May does a no show? What if, instead of the usual 10%-25% swan dive, we only get the 2.5% that has been the pattern for 2013? The possibilities boggle the mind.

In that case where will the money flood into next? Stocks that have been going up like a rocket for the past eight months, or shares that have either fallen like a stone during this time, or barely budged? Stocks that are trading at double the market multiple, or at half the market multiple? Hmmmm. Let me think about this one.

There are two major categories of the latter, commodity related shares and technology ones. China is still slowing, placing a monkey on the back of most commodities related companies. So I vote for technology, which by the way, is the cheapest it has ever been on an earnings multiple basis.

In that case, the strength in old tech will develop into far more than a one-week wonder. It could provide the rocket fuel that will power the major indexes for the rest of the year. That would take the S&P 500 up to 1,700 where it can flaunt a glitzy earnings multiple of 17.

Don?t get too giddy. This is definitely a best-case scenario. But then lately, the best-case scenarios have been happening, thanks to the reflationary efforts of our friend, Ben Bernanke.

That would be fantastic news for Apple?s long-suffering shareholders. Now that its stock has clearly broken through the 50-day moving average on the upside, the eventual target of this leg could be as high as the 200-day moving average at $541. One can only hope.

Old Tech is Rising From the Dead

Steve Jobs? Last Laugh

Diary, Newsletter

Nothing beats instant gratification. Bragging rights are nice too.

On Monday, when I strapped on this trade, angry readers emailed me to tell me that I was truly out of my mind. Apple was an ex-growth company, had lost its ability to innovate, shed its ?cool? factor, and had fallen behind Samsung with its large screen smart phone. The shares were clearly in a free fall to under $300, and I had to be ?Mad? to urge people into the stock at $395.

The Tuesday Q1, 2013 earnings changed everything. Revenues blew out to the upside at $43 billion, profits surprised at $9.5 billion, and earnings shocked, coming in at $10.09. Analyst forecasts minutes earlier ran as low as $8. The company sold a stunning 37.4 million iPhones and 19.5 million iPads.

Best of all, it returned a wad of cash to shareholders; increasing the dividend by 15% and boosting its share buyback program to $60 billion. It can afford to do so because it has an unprecedented $145 billion in cash on its balance sheet.

Not only is Apple now a value stock, it is a high yield value stock, offering investors a 3% annual yield at these prices, compared to only 2% for the S&P 500. Pension funds will not ignore this for long.

All of a sudden, Apple has recovered its ?cool? factor and is back at the forefront of innovation. Its dominance in apps and iTunes gives it a huge sinecure in risk free income. The six or so new products it will launch in the fourth quarter of this year, like a low end smart phone for emerging markets, Apple TV, the iPhone 5s, a deal with China Mobile, and new generations of iPods and iPads, all look incredibly interesting. What a difference three days makes!

So it is time for me to take profits on my (AAPL) May, 2013 $320-$350 Call spread. I?m really doing this so I can print out the confirm and carry it around in my wallet next to my spare condom. That way I can whip it out and prove any bar challengers that I made money in Apple on the long side this year, no easy task.

I am also encouraged to take profits here because I have captured 95% of the potential profit in the call spread. Why bother carrying a position in one of the most volatile stocks in the market for three more weeks for an extra 2 basis points?

For options traders, there was something really interesting that happened to Apple this week. Although the shares have risen only $15, or 3.8% in three days, the value of my deep out-of-the-money call spread has soared by 11.4%. That is because implied volatilities on the options have completely crashed. This suggests that the last bottom in Apple shares at $392 is the final one.

I think there is a high probability that the final bottom is in for Apple shares. Sure, the Q2, 2013 revenue forecast was dire at only $33.5-35.5 billion, but everyone expected this. We will know for sure if the stock can break the 50-day moving average at $435. If it does, then it is off to the races once again, and $500 becomes a chip shot. That means flipping from selling rallies to buying dips, possibly for years. But it will take years to breach the old high of $706 once more.

Let me tell you how they could get there. What if the Federal Reserve normalizes interest rates and raises overnight rates from zero to 2%? Apple?s $145 billion cash mountain would throw off an extra $3 billion in interest income a year, boosting the company?s profits, and possibly its share price, by a third. Imagine that? Steve Jobs? ghost must be laughing!

Looks Like Steve Will Have the Last Laugh

Is This the Final Bottom for Apple?

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Apple has been one of the great conundrums of the investment industry this year, the stock falling through the floor of any standard valuation model. With the shares at $395 the stock is discounting a 12% drop in earnings per year for the next several years. Either something terrible is about to happen at Steve Jobs? creation, or it is the ?BUY? of the century. I believe it is the later.

This is a company that continues to earn $200 million per hour! It also has $150 billion in cash on the balance sheet, which works out to about $120 per share. Ex-cash, you are buying the operating company at a price earnings multiple of seven times, less than half the 15.5 multiple for the S&P 500, a level one normally associates with an imminent bankruptcy. Apple is essentially has a Google (GOOG) type income statement with a JC Penny (JCP) valuation.

The reasons for the 45% plunge in Apple shares are really quite simple. This is a company that is notorious for its lack of concern about shareholders and its general antipathy towards Wall Street. While other companies carefully manage earnings expectations to reliably beat forecasts by a penny, you never see this with Apple. The earnings are what they are, take it or leave it.

This attitude allows Apple to bunch together new product releases without regard for the impact on the share price. When they deliver a series of rapid, successful product launches, the stock soars. This happened last September after the introduction of the iPhone 5, new iPads, and a new iMac, taking the stock up to an all time high of $706.

Then you get nothing for nearly a year and the stock crashes by a third. To see what I mean, look at the long-term chart below, where we have seen four corrections like this over the past decade. The pullback is bigger this time because it started from Apple?s position as the largest company in the world when everyone owned it.

There also is a compelling technical argument here. At $360 you hit a support level on the longer-term charts that stretches back two years.

You won?t have to wait long to see if this Trade Alerts works. Apple earnings come out after the Tuesday close. My bet is that the stock rallies, no matter what they say, as there is already so much bad news in prices. And for good measure, I went out and bought another iPad last weekend.

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SkyBridge Capital?s Anthony Scaramucci on Hedge Fund Radio