Thursday, October 30, 2008

Chart on Apple Inc. - AAPL

I am once again short AAPL and have now posted the chart (above) which shows a large pennant forming. We are now testing the upper boundary of that pennant which provides what looks to be a nice, measurable, low risk area to enter a short sale of this glorified consumer retail stock.

I realise the devotees of all things AAPL are legion but I am at a loss to see how this stock doesn't suffer a fate I wouldn't wish on my worst enemy. It is as it should be that Apple is just the stock a cat like Jim Cramer would want to own. A high priced, extremely discretionary, luxury item as we head into an economic environment few alive have seen or worse can imagine.

I have had some luck prior with AAPL on the short side and have been watching from the sidelines since. Today provides a nice entry point for a short sale. I am short 1 unit at $110.90 and have placed my stop just above today's highs. I realise the more aggressive out there would suggest a stop with more breathing room and I would agree. Such is trading.

I love how the pom pom network continues to drag out the bullish shills telling any and all to buy. That stocks represent great value. I can only laugh as I suspect we will be having a value conversation a many months down the road as the S&P500 hits the 4-500 level sporting a P/E multiple in the mid to high single digits. Then we will be able to have a VERY SERIOUS valuation discussion. Until then it would be wise to remember these shills have one priority, THEIR OWN. For if they didn't they would have been having an overvaluation discussion, as many blogs out there were with the Dow north of 12,000. That is water under the bridge but I trust you get the point.

Yup, bailout nation lives with the line getting longer by the day, consumer on the ropes while that same consumer represents 70% of the economy, layoffs by the drove being announced guaranteed to further worsen an already brutal housing market and yet these so called pundits, and I use that term loosely with them, continue to tell you to buy stocks. Lunacy of highest order.

So now that even the dimmest among us who have been denying recession and most probably cannot continue to do so for fear of ridicule from even the most polyannic of polyannas, will be front and center telling us how now that we are in recession it is time to buy stocks as the market is discounting all.

Yup, buy stocks when the economy is good, buy stocks while you deny recession, buy stocks when you admit recession. Quite the strategy isn't it. Probably spend the better part of 60 seconds coming up with it. I notice Brian Westbury hasn't been on TV of late as he is probably recalibrating the numbers is his no recession, productivity will save us scenario. My issue with cats like this or that Nobel candidate David Malpass, who I am amused to learn has resurfaced after his stint at Bear Stearns. My question is do you think he used the Bear stint on the C.V?, is their disdain for anyone with a bearish or negative viewpoint or outlook.

I can assure you that there will be a time to be bullish and I don't mean just ordinarily bullish, but wild eyed, go down to the bookie and borrow money kind of bullish. That time will come when ignoramus's like Dennis Kneale tell you that you are nuts to be looking at stocks. When Larry Kudlow tells you that stocks are very risky, now that's assuming that the pom pom network is still in business.

Karl Denninger over at Market Ticker had a great piece called Stop Paying Your Morgage Today, which I highly recommend as we all need to learn how to game the system like the banks, brokers, private equity do. And you thought John Snow and Dan Qualye were at Cerberus for their financial acumen did you?

Mike Panzner via his fabulous blog brought my attention to an article written by a Mr. Phil Williams entitled Recession or Depression? It is well worth you time as he outlines what is happening in a very coherent way. I also want to wish Mike congratulations as his popular best selling book Financial Armageddon, will now be available in Korean and Japanese. For those that haven't read Mike's book I cannot recommend it enough as it is almost a clairvoyant blueprint for what is transpiring now. I get no renumeration from Mike by pumping his book but I take pleasure in doing so in light of the grief and ridicule he often received on Kudlow's show for his bearish perspective, at the hands of the gallactically inferior bullish panelists alongside the shameless market pimping host himself.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit Apple ticker AAPL at $110.90 stop at $113.53
Short 1 unit ticker CRM @ $56.05 stop at $34.31

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