{"id":24174,"date":"2015-11-04T01:15:17","date_gmt":"2015-11-04T09:15:17","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=24174"},"modified":"2015-11-04T01:15:17","modified_gmt":"2015-11-04T09:15:17","slug":"celebtrating-apples-new-all-time-highs-with-four-reasons-for-caution","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/11\/04\/celebtrating-apples-new-all-time-highs-with-four-reasons-for-caution\/","title":{"rendered":"Celebtrating Apple’s New All-Time Highs with Four Reasons for Caution"},"content":{"rendered":"

(This is an excerpt from an article I originally published on Seeking Alpha on August 30, 2014. Click here to read the entire piece<\/a>.)<\/strong><\/p>\n

In early May, soon after April earnings, I presented a case predicting Apple’s stock would hit fresh all-time highs<\/a>. This was essentially a follow-up to a piece a year prior predicting a bottom for Apple<\/a> (AAPL). It only took AAPL under four months to deliver the fresh all-time high.<\/p>\n


\n
\"Apple's<\/a>
Apple’s push to fresh all-time highs since April earnings has been quite orderly and systematic<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

A review of sentiment has formed a key component of my analyses of AAPL, so it makes sense to do another check-in on sentiment now that AAPL has reached the targeted all-time highs. As one would expect at this point, the turn-around from the previous negative sentiment is now essentially complete. This means that improving sentiment is no longer a part of the bullish case going forward. In fact, with AAPL officially announcing to the media a September 9th product event with the teaser “wish we could say more,<\/a>” the stage is set for another sell-the-news event.<\/p>\n

I have four key reasons Apple is likely to take a pause and pullback somewhere around this announcement: short interest is at recent lows, options trading is relatively bullish, valuation is at 5-year highs, and Apple’s stock is reaching the median of analyst price targets.<\/p>\n

Short interest<\/strong>
\n{snip}<\/p>\n


\n
\"Short<\/a>
Short interest in Apple has steadily declined back to a 2-year (or more) low<\/figcaption><\/figure>
\nSource: Schaeffer’s Investment Research<\/a><\/strong>
\n<\/center><\/p>\n

Options trading<\/strong>
\n{snip}<\/p>\n


\n
\"Options<\/a>
Options traders are relatively confident in Apple’s shares<\/figcaption><\/figure>
\nSource: Schaeffer’s Investment Research<\/a><\/strong>
\n<\/center><\/p>\n

Valuation<\/strong>
\n{snip}<\/p>\n

Analyst price targets<\/strong>
\nApple is reaching the median analyst price target of $106<\/a>. {snip}<\/p>\n

Conclusion<\/strong>
\nIn other words, AAPL is missing a strong catalyst for significantly more upside from current levels. {snip}<\/p>\n

The market is of course abuzz trying to guess what Apple will announce. These guesses form the expectations that Apple will need to beat<\/strong> in order to catalyze an immediate post-event extension of the rally. Here is the “rumor roundup” as reported by CNBC’s Fast Money<\/a>:<\/p>\n


\n
\"Apple's<\/a>
Apple’s Rumor Roundup for the September 9th announcement<\/figcaption><\/figure>
\nSource: CNBC from Yahoo! Finance<\/a><\/strong>
\n<\/center><\/p>\n

The Fast Money segment debated how and when to fade Apple post-event. {snip}<\/p>\n


\n