Fiscal Cliff Thursday

ilene's picture


Fiscal Cliff Thursday

Courtesy of Phil’s Stock World 

11 7 2012%205 10 02%20PM%20wily%20no%20border Fiscal Cliff ThursdayDown 312 points yesterday.

That’s a hefty sell-off and we’ll see if we get some follow-through but we pretty much hit our downside targets on the head in a single day as I said to Members in yesterday’s Morning Alert:

About 13,000 on the Dow. 1,400 on S&P, 2,980 on the Nas, 7,950 on NYSE and 800 on the RUT are about the lows we have to hold – all seem like good spots to go long to me with tight stops if we break below but let’s look at this as a head fake except with a bit more conviction as 50% of the population sincerely believes they have to flee the markets before 4 more years of Socialism take us up another 100%.

Levels%20Charts%2011 7 2012 Fiscal Cliff ThursdayAs noted in the morning post, this is mainly sour grapes selling by Romney fans but there are also legitimate reasons to take some of this year’s massive stock profits off the table ahead of possible large increases in capital gains and dividend taxes. Still, we knew this was coming on Tuesday, when the market rallied massively on thoughts of QInfinity and ZIRP as far as the eye could see.

We didn’t quite hold our targets so we couldn’t get too bullish at the lows but we remain hopeful that there was a bit of over-reaction in yesterday’s sell-off and that the truth will lie somewhere in between Tuesday’s ephoria and yesterday’s panic – let’s call it 13,100 on the Dow and 1,410 on the S&P as our goals for Friday. Then we may be able to take a deep breath and think about things over the weekend.

Despite once-again rising bond yeilds, Draghi says whether or not Spain gets an OMT bail-out is entirely up to them and the ECB cannot/will not force them to do so.  That’s keeping the Euro depressed ($1.274) and the Dollar strong (80.94) and that’s keeping a lot of downward pressure on stocks and commodities.

As we expected, oil had a huge build yesterday but we played it long in the futures (/CL) off the $84 line. We’re sitting back at $85 this morning after a brief visit to $85.75.  Clearly the build in petroleum products was due to the storm but now we have another storm in the Northeast grounding planes and slowing traffic. Not too much immediate improvement in oil’s future – or the oil Futures, for that matter… So we take our Egg McMuffin money and run on that trade and we’ll be ready to go long off $84 again but happy to make $1 ($1,000 per contract) or even $0.50 as we follow the channel.

image018 Fiscal Cliff ThursdayAAPL is back at our Summer buy target of $555 and the stock was just reiterated as a buy by Jefferies with a $900 target as they see gross margins improving in Q4 (duh) and are tracking IPhone sales at 53M, a good 10% over street estimates. That can pop earnings per share over $16 vs. $13.52 currently estimated.  We are already long AAPL and my comment to Members in Chat this morning was:

AAPL – I don’t watch all those different indicators, I watch the 200 and 50 dmas on StockCharts and AAPL failed the 200 at $590 last Friday and a week below it would be bad – especially after being rejected on Tuesday and gapping down yesterday. Meanwhile, it continues to make $135M a day while you wait and it is sitting on $140Bn in cash. Its market cap is now down to $524Bn, which is a p/e of 8.  


Let’s say AAPL completely implodes and only makes $25Bn next year because no one likes its products anymore and it can’t make enough to satisfy the low demand. And it drops its margins on the stuff it can’t make enough. That gives AAPL a p/e of 16 and I STILL like it at this price ($524Bn – $140Bn in cash). So, I don’t give a crap what the squiggly lines are doing because I can buy a 2015 $450/550 bull call spread that’s 100% in the money for $50. This is not rocket science – you make 100% in 2 years if AAPL holds $550 without doing another thing. If you don’t like AAPL enough to make that bet – STOP LOOKING AT IT!!!

The market is giving us plenty of bargains at these prices but none more so than AAPL. It may go lower so scaling in is critical but $555 is a fantastic entry point for a long-term position. We’ll see how the day goes but we must make some progress or we’ll be adding more disaster hedges into the weekend – fortunately, we nailed the top on the 20th with our last batch of disaster hedges and, hopefully, this is the bottom of the channel we expected to test but – hope is not a valid investing strategy – that’s why we watch our levels!

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Fri, 11/09/2012 - 08:56 | 2963916 Grand Supercycle
Grand Supercycle's picture

Phil’s Stock World bullish AAPL call will be seen to be very wrong.


As mentioned, APPLE parabolic weekly & monthly charts are at EXTREME levels.

Downtrend on daily chart continues.

Unfortunately longs will be badly burnt.

Fri, 11/09/2012 - 00:44 | 2963392 exartizo
exartizo's picture

You know, I wish Ilene would stop prostituting herself to these idiots. Who in their right mind puts even Massively Debauched Debased Devalued Dollars into the American Stock Market?

Hasn't word gotten sufficiently around the retail market that every last Wall Street Whore is peddling that equity bilge ala BTFD by now?

Doesn't everyone (at least on ZH) know that the algos are now in charge of the equity markets, derivatives markets, bond markets and soon to be every other market on the planet?

Who does this idiot take us for?


What, are you fucking nuts?

Go peddle that ^&^%$#! to The Muppets. GS can point you in the right direction, if they still have any.



Fri, 11/09/2012 - 00:41 | 2963385 IamtheREALmario
IamtheREALmario's picture

A. Apple is a labor arbitrage play fueled by massive marketing and less effective competitive marketing.

B. the labor arbritage play has peaked and will ebb

C. Competition always catches up and commoditizes what used to be competitive advantage

If fundamentals matter then AAPL bulls are morons... over the long run.

Thu, 11/08/2012 - 21:18 | 2962850 Cole Younger
Cole Younger's picture

I wouldn't invest a penny in this manipulated market..if and when a crash occurs, it will happen at night while the U.S. traders are sleeping..They will wake up wiped out..

Thu, 11/08/2012 - 21:15 | 2962843 JuicedGamma
JuicedGamma's picture

When's Reggie gonna show up saying "I told ya so"?

Thu, 11/08/2012 - 21:12 | 2962836 lolmao500
lolmao500's picture

The market needs to go down to 6000 before January 20 2013 for the lulz.

Fri, 11/09/2012 - 01:35 | 2963476 fourchan
fourchan's picture

im not going long till we test 12000, look out below bitches.

Thu, 11/08/2012 - 20:23 | 2962673 Bruin4
Bruin4's picture

AAPL was the buy of a lifetime at 100 and it will go down in history as the short of a lifetime at 700

Thu, 11/08/2012 - 19:19 | 2962553 nmewn
nmewn's picture

"As noted in the morning post, this is mainly sour grapes selling by Romney fans but there are also legitimate reasons to take some of this year’s massive stock profits off the table ahead of possible >>>large increases in capital gains and dividend taxes."<<<

"The market is giving us plenty of bargains at these prices but none more so than AAPL. It may go lower so scaling in is critical but $555 is a fantastic entry point for a long-term position." 

Can someone explain to me what a "long term position" is with capital gains & dividend taxes set to rise in a month and a half?

Is that algo speak for a week or IRS speak for Wash Rule?

Thu, 11/08/2012 - 23:02 | 2963171 New_Meat
New_Meat's picture

"Can someone explain to me what a "long term position" is with capital gains & dividend taxes set to rise in a month and a half?"


Fri, 11/09/2012 - 00:07 | 2963331 nmewn
nmewn's picture

He who fights and runs away lives to fight another day...but I took his eye out ;-)

Fri, 11/09/2012 - 00:42 | 2963386 New_Meat
New_Meat's picture

+NBF, but after that, well, not so much

Thu, 11/08/2012 - 20:07 | 2962643 SmittyinLA
SmittyinLA's picture

You mean your investment accounts aren't tax protected or deferred?


Long term investors will pull out their equity and profits long after Obama is strung up Mussolini style

Thu, 11/08/2012 - 19:17 | 2962531 Hannibal
Hannibal's picture

Govt debt/deficits do not matter, these are socially constructed (numbers), platonic abstracts invented by central bankers who want us to think that "it" is actually something real, which it is not.  So don't be fooled, the bankers' dirty little secret is out that "fiat is a fraud"!

Thu, 11/08/2012 - 18:06 | 2962333 dexter_morgan
dexter_morgan's picture

Do these posters have to pay to get their stuff on this site?

Thu, 11/08/2012 - 19:14 | 2962541 irishlink
irishlink's picture

Oh must be drunk and cringing by now...some advert for your talent. Buy AAPL and you will feel better tomorrow an aple a day.....

Thu, 11/08/2012 - 17:50 | 2962268 silverserfer
silverserfer's picture

Lets our targets blow out long and hold gains n buy stops with our shorts down. Cool?

Thu, 11/08/2012 - 17:28 | 2962174 resurger
resurger's picture

long my dick

Thu, 11/08/2012 - 17:02 | 2962018 sitenine
sitenine's picture

Long AAPL?  ROFLMAO. Is that you Joe?

Thu, 11/08/2012 - 17:51 | 2962276 THECOMINGDEPRESSION

I'm going to buy 10 shares and possibly double my money one day..maybe..or lose it all after some genius comes up with a better computer, phone, app...


going to the racetrack better deal there

Thu, 11/08/2012 - 17:21 | 2962129 johnQpublic
johnQpublic's picture

long term food storage value of the ipad will push prices higher along with corn, wheat and energy

Thu, 11/08/2012 - 16:05 | 2961758 GottaBKiddn
GottaBKiddn's picture


Come on guys, you heard the man, this is "...mainly sour grapes", that's all.

Thu, 11/08/2012 - 16:00 | 2961739 eclectic syncretist
eclectic syncretist's picture

Phil says buy AAPL, Cramer says sell AAPL.  What ever are we to do????!!!

Thu, 11/08/2012 - 16:04 | 2961754 MFLTucson
MFLTucson's picture

How about making an informed decison on your own with your own research? 

Thu, 11/08/2012 - 16:12 | 2961780 eclectic syncretist
eclectic syncretist's picture

I did my research and now the price of the stock has lost even more value and is down to $542.  Doesn't that make it an even better buy?

Thu, 11/08/2012 - 16:15 | 2961793 eclectic syncretist
eclectic syncretist's picture

Actually, it's still going down even further.  Maybe I should just wait till it bottoms after the huge margin compression and general depression unfold more completely.  Would Phil be OK with that?

Thu, 11/08/2012 - 17:26 | 2962157 earnyermoney
earnyermoney's picture

Phil's in Vegas. Decided to party while his fellow New Jersians suffer in the cold. Now that's a progressive showing his true colors.

Fri, 11/09/2012 - 10:56 | 2964316 eclectic syncretist
eclectic syncretist's picture

AAPL is at 535 this morning.  I suppose he must be telling everyone in Vegas it's the chance of a lifetime and to go all in.

Fri, 11/09/2012 - 11:00 | 2964327 somethingisrotten
somethingisrotten's picture

It's likely on its way to 430-435 when margin calls really hit.

Thu, 11/08/2012 - 15:47 | 2961679 JailBank
JailBank's picture

The market scares the crap out of me right now. I'll be on the sidelines wiht my cash and the little bit og PMs I have waiting on the dip.

Thu, 11/08/2012 - 15:42 | 2961657 ghostzapper
ghostzapper's picture

Surprised and frankly disappointed ZH posts this drivel on its otherwise fantastic site.  Wow, this is real creative!!!  I suppose he is the only one in the world that can dtermine AAPL's PE and do a sensitivity analysis on it.  the PE is there for a reason.  If the market felt it warranted a PE of 30 it would already be there. 


What the hell do PE ratios have to do with buying and selling stocks anyways?  Good luck building a big long term position at $555.  Sure, AAPL will have its share of bounces but it sure looks like the boys are leaving this one and if the market has problems this thing will go below $400. 

Thu, 11/08/2012 - 18:45 | 2962455 disabledvet
disabledvet's picture

here's what i would say: "to what extent do you think Phil that the current selling is due to a fear of a significant increase in capital gains taxes courtesy of the election and should you say "yes i do think that's a big reason for the sell off" then since that would be a permanent increase why would Apple then become a buy?" that's what i would say...indeed, in fact i am saying that.

Thu, 11/08/2012 - 15:40 | 2961644 Mad Mohel
Mad Mohel's picture

$900 target? Without Jobs? With Obama round 2? Are these Jefferies sons of bitches based in Colorado?

Thu, 11/08/2012 - 16:33 | 2961861 harami
harami's picture

They're probably too baked from the recreational use of marijuana to accurately pretend like they know what they're doing.

"Dude... where's the Ctrl+P button again.... hahahaah..."

Fri, 11/09/2012 - 00:45 | 2963396 jeff montanye
jeff montanye's picture

 that quotation sounds like occupational use.

Thu, 11/08/2012 - 15:35 | 2961620 obejoyful
obejoyful's picture

AAPL is a descrestionary consumer stock, when real life come back this will be under $100.  Then with all the competition is will drop to $50.

Thu, 11/08/2012 - 19:56 | 2962622 vix is for kids
vix is for kids's picture

O.B., do you have even 1 share sold short, or own any puts?

Thu, 11/08/2012 - 15:35 | 2961617 q99x2
q99x2's picture

I don't like AAPL. They should scrap the company and just trade the stock as a strickly gambling endeavor.

Thu, 11/08/2012 - 17:22 | 2962134 Metalredneck
Metalredneck's picture

Samsung has an app for that.

Thu, 11/08/2012 - 15:30 | 2961580 homersimpson
homersimpson's picture

This stock should be in the LOW triple digits to begin with all the sand-bagging they've been doing for years now. OMG - another SURPRISE earnings beat.. after they instilled paper-thin estimates to all the analysts.

Thu, 11/08/2012 - 15:28 | 2961567 Captain Planet
Captain Planet's picture

BTFD! Wholesale AAPLs at $555. Or is it $541?

Thu, 11/08/2012 - 15:32 | 2961596 Everybodys All ...
Everybodys All American's picture

I like it at $530.

Thu, 11/08/2012 - 16:28 | 2961839 CunnyFunt
CunnyFunt's picture

I like it at $45.

Thu, 11/08/2012 - 15:22 | 2961544 mrktwtch2
mrktwtch2's picture

thats a big if ..if the indices fall 30% from here because of the euro collapsing..your apple wont be north of 350..

Fri, 11/09/2012 - 09:33 | 2964019 LongSoupLine
LongSoupLine's picture

Long Apple...farming.

Thu, 11/08/2012 - 16:28 | 2961836 Ruffcut
Ruffcut's picture

If I had a dollar for everytime someone said fiscal cliff, I'be Warren Buffy.

New buzz word, same old bullshit.

Nothing means shit, until it actually does.

Thu, 11/08/2012 - 16:47 | 2961923 HurricaneSeason
HurricaneSeason's picture

Aint that the truth. The <$100 billion(probably alot less) fiscal cliff only involves less than 10% of the annual deficit. The new buzz word should be the upcoming $2.5 Trillion increase to the national debt ceiling. The last $2.5 trillion only lasted 15 months. Boner will want $250 billion in annual cuts for that increase. That should be about 5 million jobs. The stock market will crash like it did the last time if the fools get on tv to argue about it like last time.

Thu, 11/08/2012 - 20:35 | 2962708 Enslavethechild...
EnslavethechildrenforBen's picture

They will crash the stock market to get a 500 Trillion Dollar bail out from O Bummer

makes perfect sense

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