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  • squeezetracker squeezetracker Nov 9, 2012 8:43 AM Flag

    Gundlach's "Chart Analysis" Misses the Boat

    more rumblers

    Google Grundlach and porn and drugs and stealing and you'll get dozens of returns... but those are just realities and bfd about his lousy reputation.

    CNBC recently hyped his $425 target like he was a genius on equities, but he is not close to that -- he's a risk oriented bond manager who ostensibly likes to party like a college guy. His "chart analysis" is on AAPL really flaky. His basic premise is that charts don't like to go vertical and usually round trip to that level, and further that this one did starting at $424.

    Have a good look at a weekly chart over the last 2-3 years. AAPL rose from $424 alright, in tandem with revenues, earnings, ebitda and cash more than doubling without any debt. But vertical? No, more like hockey stick up.

    Now, while it is a reality that many stocks go parabolic (again, AAPL did not) only to have Wall Street wake up to management fraud, a collapse in the business, superceding technology (e.g., AAPL's iPods quashing msft's Zune or stuffing the PC business) or just a strong cup of coffee and sudden realization that something being chased by the algo momentum guys really is not all that special (see TZOO's parabolic rise from $10 to well over $100 back to $20 and still nothing special to think about going forward), none of those things aaply to AAPL. Still, it is a reality that stocks (charts) don't like to go hard in any one direction for long unless there is something truly fundamentally broken with the story and that pullbacks -- the pause that refreshes -- is often healthy. With AAPL, all #$%$ aside, the reality is that NOTHING is broken on fundamentals and it is on the verge of really taking off on fundamentals.

    AAPL has been the key winner in so many portfolios this year that it was the name to sell for redemptions, to offset losses on other portfolio assets, and easy to short to reduced net longs into this turbulence -- at the likely end of the AAPL drop, but there's more.

    AAPL is also a huge part of the key indexes and, all fiscal cliff and EU and china and polarity #$%$ aside, it is also at the center performance benchmarks and also massively owned by hedge funds and mutual funds who can and do use many tools to press upside and hedge the downside, and that reality will remain part of the landscape from here forward. We are ok with that and everyone else long needs to grip that as well. More, for all those dynamics, AAPL will likely lead the dramatic upside reversal coming for the entire market once the idiots left and right start leaning toward the center and resolving the DC ensnarlment that is crippling progress.

    The key point about AAPL and the "vertical" chart is this: as on the upside, charts don't like to drop in a vertical for long either, even when the FUNDAMENTAL story IS broken (again, it is not broken here). But have a good long look at what has happened. Last summer AAPL missed the consensus (not guidance) and "disappointed" on guidance and the stock dropped ~20% from $644 back to $522. Then along came the Minipad and early iPhone 5 announcement and the reversal launched the shares to $705 (where again mgmt let the street assume they would beat the old Steve pattern of WAY underguide and then smoke consensus (and WAY beat guidance)... but they beat guidance by only a little, missed the consensus, and then guided to 20% less than the street consensus for the current Q. All those pieces were plenty to start the current shakeout, especially into the teeth of the two prior paragraphs, but now the stock has been yanked down $1667 or 24%! (twenty-four percent!) and note that the slope of that decline is harder and sharper than what Grundlach called "vertical."

    We enjoyed MKM's piece yesterday on the AAPL chart. As with other boutiques, they do lots of work for
    the hedge fund community, so, they a finger on the pulse of PMs long and short and both. They also do some historically sound technical (chart) and quant work and think the mattress bottom of this now oversold pullback is around $550. We're going to see how good that is this week... but we share their views on "oversold" and "done" right about here.

    Now let's see how much Obama wants to go down in history as (A) a President, like Clinton, who got a lot done in his second term by moving to the center, or (B) the most divisive, polarizing figure since Lincoln -- and also the one who was amongst the weakest and least effective in history -- right up there with Carter. Yeah, market and economy off to the races starting today? or Obama setting the stage for four more years of political stalemate, torpedoed economy and job growth, and sickeningly polaring rhetoric ala Krugman, Reid and Pelosi's advocacy. To be clear, we think the far right wingnuts are just as toxic on all of those counts.

    --------------
    Off Topic
    On Grundlach and porn and drugs and stealing and there are dozens of returns... Here's just one from a year ago when his former employer was suing him.

    By Mary Slosson
    LOS ANGELES | Thu Jul 21, 2011 9:30pm EDT
    (Reuters) - Evidence allegedly showing that star fund manager Jeffrey Gundlach kept a stash of drugs and porn in his office will not see the light of day at trial, a judge ruled in a lawsuit pitting Gundlach against his former employer.

    More evidence related to Gundlach's alleged sexual liaisons with former co-workers also will not be allowed in the high-profile trial scheduled to begin next week between Gundlach and Trust Company of the West, a California judge ruled on Thursday.

    TCW sued Gundlach, its former chief investment officer, in late 2009. The company Gundlach formed upon getting fired, DoubleLine Capital, used stolen proprietary data including contact databases to develop a client base, thereby engaging in "an ongoing pattern of wide-ranging, systematic unfair competition," TCW says in its complaint.

    TCW is seeking in excess of $375 million in damages, according to Peter Viles, its corporate communications head.

    Gundlach fired back with a countersuit, claiming that TCW owes him damages from his termination. He is seeking $500 million in damages, according to his defense team.

    "Unrelated evidence" found in Gundlach's office would not be considered except under exceptional circumstances, said Los Angeles Superior Court Judge Carl J. West on Thursday.

    "Collateral evidence will drag us down and take an untoward amount of time," West said, claiming that the extraneous evidence would be a distraction from the serious issues of fraud, proprietary theft, and damages stemming from Gundlach's termination.

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    • bump

    • Have a read through this part again... and then see my recap of Grunlach's comments on Fast Money video tonight.

      Google Grundlach and porn and drugs and stealing and you'll get dozens of returns... but those are just realities and bfd about his lousy reputation.

      CNBC recently hyped his $425 target like he was a genius on equities, but he is not close to that -- he's a risk oriented bond manager who ostensibly likes to party like a college guy. His "chart analysis" is on AAPL really flaky. His basic premise is that charts don't like to go vertical and usually round trip to that level, and further that this one did starting at $424.

      Have a good look at a weekly chart over the last 2-3 years. AAPL rose from $424 alright, in tandem with revenues, earnings, ebitda and cash more than doubling without any debt. But vertical? No, more like hockey stick up.

      Now, while it is a reality that many stocks go parabolic (again, AAPL did not) only to have Wall Street wake up to management fraud, a collapse in the business, superceding technology (e.g., AAPL's iPods quashing msft's Zune or stuffing the PC business) or just a strong cup of coffee and sudden realization that something being chased by the algo momentum guys really is not all that special (see TZOO's parabolic rise from $10 to well over $100 back to $20 and still nothing special to think about going forward), none of those things aaply to AAPL. Still, it is a reality that stocks (charts) don't like to go hard in any one direction for long unless there is something truly fundamentally broken with the story and that pullbacks -- the pause that refreshes -- is often healthy. With AAPL, all #$%$ aside, the reality is that NOTHING is broken on fundamentals and it is on the verge of really taking off on fundamentals.

      AAPL has been the key winner in so many portfolios this year that it was the name to sell for redemptions, to offset losses on other portfolio assets, and easy to short to reduced net longs into this turbulence -- at the likely end of the AAPL drop, but there's more.

      AAPL is also a huge part of the key indexes and, all fiscal cliff and EU and china and polarity #$%$ aside, it is also at the center performance benchmarks and also massively owned by hedge funds and mutual funds who can and do use many tools to press upside and hedge the downside, and that reality will remain part of the landscape from here forward. We are ok with that and everyone else long needs to grip that as well. More, for all those dynamics, AAPL will likely lead the dramatic upside reversal coming for the entire market once the idiots left and right start leaning toward the center and resolving the DC ensnarlment that is crippling progress.

      The key point about AAPL and the "vertical" chart is this: as on the upside, charts don't like to drop in a vertical for long either, even when the FUNDAMENTAL story IS broken (again, it is not broken here). But have a good long look at what has happened. Last summer AAPL missed the consensus (not guidance) and "disappointed" on guidance and the stock dropped ~20% from $644 back to $522. Then along came the Minipad and early iPhone 5 announcement and the reversal launched the shares to $705 (where again mgmt let the street assume they would beat the old Steve pattern of WAY underguide and then smoke consensus (and WAY beat guidance)... but they beat guidance by only a little, missed the consensus, and then guided to 20% less than the street consensus for the current Q. All those pieces were plenty to start the current shakeout, especially into the teeth of the two prior paragraphs, but now the stock has been yanked down $1667 or 24%! (twenty-four percent!) and note that the slope of that decline is harder and sharper than what Grundlach called "vertical."

      We enjoyed MKM's piece yesterday on the AAPL chart. As with other boutiques, they do lots of work for
      the hedge fund community, so, they a finger on the pulse of PMs long and short and both. They also do some historically sound technical (chart) and quant work and think the mattress bottom of this now oversold pullback is around $550. We're going to see how good that is this week... but we share their views on "oversold" and "done" right about here.

      Now let's see how much Obama wants to go down in history as (A) a President, like Clinton, who got a lot done in his second term by moving to the center, or (B) the most divisive, polarizing figure since Lincoln -- and also the one who was amongst the weakest and least effective in history -- right up there with Carter. Yeah, market and economy off to the races starting today? or Obama setting the stage for four more years of political stalemate, torpedoed economy and job growth, and sickeningly polaring rhetoric ala Krugman, Reid and Pelosi's advocacy. To be clear, we think the far right wingnuts are just as toxic on all of those counts.

      HERE's THE UPDATE:
      Tonight Grundlach showed me he is much brighter than his earlier comments on AAPL, which expalined were sophomoric above, would suggest. Ya... Tonight he says the break below the May low this year seemed to gather momentum this morning, but then turned around [that happened right at the moment on all the obama, Boehner, Reid and Pelosi chorus hymnal began this morning, precisely what I suggested the pols needed to sing unless they want to go down as the biggest gumps in DC history and ruin poor Obama's legacy] and closed out the day above that May low (Grundlach said it was $525, but it was actually $522).

      GRundlach went on to say that he thinks AAPL is "not superhuman" [sic] today and won;t be in the future as everyone thought at $705 in October, but that it can easily rally up $50 in a hurry so he thinks that unless one is properly hedged and in it for the long term, it would be smart to cover. He added that short term traders should not be short here for the foreseeable future. Ahhhduh...

      See my analysis of the flaws in his original thinking, including the parts on this and other threads where i suggested we would not likely see a fail of the May low, at least on a weekly chart.

      The reality is that the fiscal cliff stupidity discussed by Barney Frank yesterday (~ "We can fix it in a couple months after going off the cliff and it will all be ok"???? -- what a tard and no doubt the CEO parade in DC told bama and all those idiots this needs to be fixed now or the economy will be in deep S as layoffs and furlows will accelerate, retailers will be blown out of the holiday sales, and we'll be headed deep into an ulgly recession. Did you notice how Obama looked like BillMurray in Groundhog Day as he ate crow on being the badass re-elected/annoited one? Thank heavens they shook some sense into that jackass.

      We look forward to seeing these shares roar now as the updated sourcing, margin, sales volumes, China Mobile, Asian iPad and iPhone sales and the like blend together with all the hedgies taking off hedge shorts to get back to 100% net long and leveraged long on these shares as the key stock to own throughout 2013 en route to $900+.

      p.s. Hey Grundy, keep on reading our publications as summarized here -- there is hope for you yet.

    • bump

    • read it and you'll understand that Grundlach although his ego is observable, he is definitely not the smartest equity player or on anything else in the universe. His ridiculous comments will go down as almost precisely calling the bottom of the lame washout though. LOL

      • 1 Reply to squeezetracker
      • What did i tell you? See his comments on Fast Money Friday -- just 6 days later he says the instituional support at $525 was very obvious, the bottom is in for the foreseeable future, and look for a Fast runup of $50 and time to cover unhedged/short term trading shorts. LOL

        He thinks after that it will depend on the newsflow. ah duh... China Mobile, iTV, iPhone 5 kicking it, pads dominating all but the trailer park buyers wanting something "cheap"... and smashing guidance for the Q and a far brighter outlook than the doom and gloom that has recently swamped the market/this stock? Ah duh, ah duh. $100 pop coming on China Mobile news alone...

    • offset to short bashers' blithering and grundlach's wishful thinking

    • Good news flow returning now.

    • I was about to give up on this board completely (so many nonsense posts and trash talking), it's refreshing to read someone with an thoughtful point of view (regardless of whether it's positive or negative). Like finding a cold glass of water in the desert...

    • Squeetracker is the BEST THING this board has going for it... God Bless you Sir!

    • great post.

      I bet he'll want to smoke some weed and wax the carrot on Monday to relieve some stress

    • The path to enlightenment on AAPL...

      the stage is set for a massive reversal now... all the hedgies net short will be goosing the upside with short hedges coming off and adding new long shares.

      einhorn is often incredibly wrong, but he is right to be long (and likely pulling down all hedges now) on this story...

      Sell those puts while you still have some value left! LOL

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