Apple: The World’s Leading Company – Short The Stock (NASDAQ:AAPL)

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Japan, Tokyo, Ginza, Apple Store,

fazon1/iStock Editorial via Getty Images

On April 1, 1976, Steve Jobs, Steve Wozniak, and Ronald Wayne founded Apple Inc. (NASDAQ:AAPL), which changed the world. In Steve Wozniak’s biography, he wrote that Apple was a better name than alternatives. “We both (Jobs and Wozniak) tried to come up with technical-sounding names that were better, but we couldn’t think of any good ones.” Apple is the name because the pair could not come up with anything better. In 1976, Wozniak and Jobs worked together in Steve Job’s garage. They funded their vision by selling Steve Job’s Volkswagen minibus and Steve Wozniak’s programmable calculator.

AAPL’s first product, Apple-1, markets the beginning of the personal computer industry. Apple-1 was a working circuit board, but at Job’s insistence, it was in a stand-alone machine in a custom-molded plastic case, not a steel box that housed the early machines. The Apple-II also offered a color display that made Wozniak’s first microcomputer appeal to the average person.

With more than a few speedbumps along the way, AAPL continued to grow. Many analysts believed the death of Steve Jobs in 2011 caused the company to lose its heart, soul, and marketing advantage. Over the past eleven years, his handpicked successor, Tim Cook, took the company to the next level, making AAPL the most successful company in the US with the largest market cap.

AAPL is an amazing company, but the APS was short the shares on March 11.

Apple’s long-term trend is nothing short of amazing

In September 1984, AAPL shares traded at a split-adjusted 11 cents.

Long-term bullish trend in AAPL stock

Long-Term AAPL Chart (Barchart)

After rising above the $1 level in 1999 and 2000, the stock dropped below until 2004. Starting in 2009, AAPL shares took off on the upside, reaching a high of $182.94 in January 2022.

AAPL has an impressive market cap and is a core holding for many portfolios

AAPL is the leading US stock with the largest market cap. At the $154.73 level on March 11, Apple Inc’s market cap was $2.525 trillion. AAPL is a core holding for many portfolios and the leading stock on the technology-heavy NASDAQ.

AAPL expertly navigates the analyst community by under promising and overdelivering quarterly results.

Apple - Bullish trend in earnings and outperformance over the past four quarters

Quarterly EPS- AAPL (Yahoo Finance)

The chart illustrates that AAPL beat analysts’ consensus EPS forecasts in three of the past four quarters and met the estimates in Q3 2021. AAPL will report Q1 2022 earnings on April 6, with the market expecting the company to earn $1.43 per share, below the Q4 2021 $2.10 level.

Apple - Bullish trend in revenue and earnings since 2018

Revenues and Earnings AAPL since 2018 (Yahoo Finance)

The chart highlights that revenues and earnings have been trending higher over the past years, as AAPL is a technology beast.

The stock turned lower after the January 2022 all-time high

Bull markets rarely move in straight lines. AAPL shares ran out of upside steam when it reached another record peak on January 4 at $182.94 per share.

Bearish trend in AAPL shares since January 4, 2022

Short-term bearish trend in AAPL shares in 2022 (Barchart)

The chart shows the pattern of lower highs and lower lows since early January that took AAPL to a low of $152 on February 24, when Russia invaded Ukraine.

Like many US and European companies, AAPL has put Russia in the penalty box, halting sales of products and restricting access to Russian news apps. While AAPL leads the way with a 17% share of the Russian market, Russia is a small market for the company, accounting for less than 1% of worldwide revenues.

Meanwhile, Russia’s alliance with China poses a far greater threat for the business. In late 2021, Tim Cook, AAPL’s CEO, made a $275 billion deal with the Chinese government. If China follows Russia and decides to force a reunification with Taiwan, it would have a far more significant impact on revenues and earnings.

AAPL’s Beta – Underperformance during bearish trends

Beta is a way of measuring a stock’s volatility with the overall stock market’s price variance. The entire stock market has a beta of 1.0. Stocks with a value greater than 1.0 are more volatile than the market, meaning they rally more than the stock market during bullish periods and fall more when bearish trends emerge. AAPL’s 60-month beta is at the 1.19 level, which is slightly more volatile than the overall stock market.

AAPL is the most successful company in the US and worldwide, but its beta means that a bear market in stocks would cause an overall underperformance in the shares.

As of the end of last week, the most representative stock market index, the S&P 500, declined by 11.79% in 2022. Over the same period, AAPL shares fell by 12.86%.

The APS is short AAPL, for now

As of March 11, 2022, the trend in AAPL shares was lower. The APS was short AAPL shares over the past weeks as the trend is always your best friend in all markets. APS holds ten highly-liquid and optionable stocks and ETF products. AAPL is a component as it meets the strategy’s requirements.

Following trends via an algorithmic system requires strict adherence to rules. We do not attempt to pick bottoms or tops in any markets and are typically short at bottoms and long at tops. Taking the most significant percentage out of trends requires removing emotional impulses from trading and investing. We ignore fundamentals, news, and all of the daily noise. Our signals are never intraday; they can only change at the end of a session. Our system does not get caught up in the daily frenetic trading activity. News and noise are at a frenzied level with the war in Ukraine.

The price of any asset is always the correct price because it is the level where buyers and sellers meet in a transparent environment, the marketplace. Crowd behavior that determines trends can be the optimal market approach across all asset classes. As of March 11, the crowd’s wisdom points to a bearish trend in AAPL. When the trend changes, the APS will issue a buy signal for the world’s leading company.



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