I’ve been a long time AAPL trader and long term holder of the stock. It’s one of only 2 stock positions I hold in my retirement accounts. Apple just had yet another earnings bonanza and it’s getting difficult to describe the earnings because once again “it’s the best quarter ever”. Not only was it the most revenue but also the most profit. And they pulled it off while having supply chain problems that wiped $6 billion off the top. The $124 billion should have been $130, and the strength was across every geographic segment. The only product that took a small hit was iPad sales due to more challenging supply chain issues for certain parts of the iPad.
Here’s why I’m bullish both in the short and long term.
The Apple installed base continues to climb and crossed the 1.8 billion mark. This is the number of devices in active use. According to CFO Luca Maestri it’s growing everywhere and not just in one or two regions. It hit an all-time record in each major product category and in each geographic segment.
Apple said half of all new iPad purchases and 2/3 of all Watch purchases were by people new to iPad. 60% of Macs sold in China were to first-time Mac buyers. These will likely lead to more sales from those people are they become more invested in the ecosystem.
There are now 768 million paid subscribers on Apple’s platform. This is an increase of 27% in 12 months. This does include people who are subscribing to non-Apple services using the app store of which Apple would collect between 15-30% of that revenue. Apple is successfully building subscription revenue and it’s growing rapidly. The chart for services revenue is a lower-left to higher-right line and seems to be accelerating.
Mac revenue continues to climb and there’s still so much market out there to claim. Year over year it’s a 25% increase driven primarily by the new ARM based processors (M1, M1 Pro, and M1 Max).
Strong product mix. Apple continues to iterate year over year on their products and continues to grow even without releasing any new ground-breaking hardware. I think we are still a year away from any new product categories, but Apple has shown incredible resilience by growing their existing markets even in the face of difficult supply chain constraints. Their ability to manage their way through that is best in class. I’m expecting several more product releases this year and to see Apple complete the transition to Apple silicon for all their Mac lineup and possibly a new M2 chip to replace some of the M1-products they released last year.
In the shorter term I’m looking to take a position when I get a green Heikin Ashi and a bullish MACD on the daily. Using those signals results in great gains over the past 3 years. Depending on shares or calls you are looking at a potential 150% gain on average the last time I looked at the data.
Longer term I see lots of blue sky for Apple ahead especially as they complete their Mac transition, grow the services business, and look to enter new hardware markets in 2023.
It wouldn’t be complete DD without mentioning the risks. Apple’s biggest risk by far is legal and legislative. They are facing a lot of challenges internationally and in the US from states and Federal branchess of government looking to regulate the App store. Legally I think they are still on solid ground and in the long term any impact would be minimal to moderate. In the short term the stock could get rocky should the wrong legislation make it through Congress or in another international major market for Apple.
From my experience you really do need a minimum 180 DTE for AAPL. Has been consolidating so much you just can’t take the risk with AAPL sometimes. If you can afford 270 DTE - even better.
I’m going to be very careful today. Today may be too early as AAPL could get dragged down into a bearish MACD and a red HA in day one. So if I play it’ll probably be later in the day and close to market close.
I’m out of my position for the time being. I wanted to get into cash for the challenge, and today was a red day for Apple. The MACD is bullish, and seasonality is good for Apple right now. If we stay bullish the next time we have a green HA will be another possible entry.
Today would be an entry point for the next pay day cycle on Apple. Green HA, bullish MACD (20,26,9). I’m waiting on cash settlement or I would pick up calls. I still think it’s a bit risky here bc it’s not incredibly strong momentum today and the market is tentative. But if you stick to payday cycle strategy, today is an entry.
As I feared, Apple exited the payday cycle today posting a red HA. I think the general market sentiment got the best of this one. I will look to get back in once we get another green candle on the daily for hopefully a strong run as long as it’s got some momentum behind it.
Today was a continuation of Payday cycle which started yesterday. A Payday cycle (I didn’t invent this strategy, btw) starts when you get a green HA candle on the daily. It can be a stronger cycle when the MACD (20,26,9 OR 12,26,9) is also bullish. I still don’t love this one as it’s not a very strong movement in the MACD but it fits the criteria.
Volume looked to be below average, however I think a lot of this is general market sentiment. I’m not currently in this trade, as I’m not keen to hold longer term trades in my account right now, and the average length of this strategy is around 8 days if I remember correctly.
Update: Apple broke down below the 166 level and continued all the way down to 152. It has bounced off that support and moved upward. If it can get above that 166 level and stay there it could continue to run up. That 166 seems to be a key level. The MACD is still bearish though so it’s not the best setup.
Apple has a product event scheduled for 3/8. They will be announcing new Macs which could either be more M1 Pro/Max models or possibly the M2 chip. It’s been 18 months since the M1 so the cadence fits. Moderate chance they release an even more powerful version of the M1 Mac chip in a Mac Pro. Outside chance it’s a completely new product. Apple can run up into its release events and then sell off the day of.
