Fundamental Analysis

Apple Growth Story: Borrowing From the Future

April 14, 2016

We were asked a seemingly simple question this morning. What did we, as Apple investors, miss last summer that could have helped us to avoid the steep correction in share price? There are a myriad of possible answers. But the most elegant and reasonable is actually the simplest. Apple borrowed growth from the future.

Apple has created a relatively well-established trend as far as growth rates when you look at specific quarters. Below, we look at each particular quarter with actuals going back to the beginning of 2011. We use a regression analysis to determine where unit sales should have been in 2015 and in the future. Let’s take a look.

Note: blue columns represent actuals; red columns represent our expectations for the March and June 2016 quarters, and the small red triangles extrapolate the likely future unit sales.

March Quarter. Based on the chart below, it’s easy to see that the March 2015 quarter was a blowout as far as iPhone unit sales. As a consequence, fewer are likely to have purchased new phones in the March 2016 quarter. That’s why we say that in 2015, Apple “borrowed” growth from the future. Based on the regression analysis, unit sales should get back on track in the March 2017 quarter with north of 65 million units.

iPhones March

June Quarter. The June regression analysis shows a similar dynamic to March, but to a lesser degree. Apple will likely post a smaller iPhone unit sales count in the June 2016 quarter than it did the year prior. But also just like March, the June 2017 quarter should get back on trend with just under 55 million unit sales.

iPhones June

September Quarter. Here’s where things get interesting. In September 2015, there was no “borrowing” of future growth. Therefore, this upcoming September 2016 should see strong year-over-year growth of roughly 55 million units, with similar growth in 2017. Investors are likely already factoring a decline in June 2016 year-over-year sales. But after Apple reports in March actuals / June guidance in two weeks, September will be coming into view. We believe that’s key, as investors are always forward-looking (roughly 6 months). We feel particularly good about this quarter as the R-squared – a statistical measure of how closely data fits to a regression line – is almost 100, meaning the growth is almost exactly linear and easily estimated.

iPhones September

December Quarter. Here’s where the real fun starts. Apple started “borrowing” future growth in iPhone unit sales in December 2014. That’s why the December 2015 numbers were as weak as they were. But this upcoming December 2016, Apple is likely to get back on trend. The regression analysis infers that roughly 85 million unit sales are likely to be announced – based on the established longer-term trend of iPhone unit growth. That works out to a roughly 10 million unit increase each year from 2011.

iPhones December

What Does This Mean? The downtrend in Apple shares should be coming to an end. In just 10 short weeks, the June quarter will be closed out and behind us. From that point, Apple will no longer be faced with the headwinds of strong quarterly comparisons. It will be important to see how future unit sales compare to these regression lines; it will allow us to see whether Apple is likely to face the same issues in the future.

Apple: A Positive Shift in Sentiment

October 28, 2015

Apple reported a solid quarter and provided guidance that was slightly ahead of our expectations (you can check out our pre-earnings expectations here). The most important pieces of the report weren’t provided in writing, but rather gathered from Tim Cook’s comments on the conference call.


  • iPhone. Missed our estimates on the unit count, but ASP was well ahead of our expectations. Overall, revenue came in just 0.7% below our projection. We don’t see this as a negative; instead, we view it as Apple management shifting sales into the much tougher comp – the December quarter.
  • Macs. Our revenue projection was within 1.0% of the actuals, with units very slightly below our estimates, but ASP making up much of the difference.
  • iPad. This was the most meaningful departure from our estimates. Not only did they sell nearly 400,000 more iPads than we expected, but the ASP was also $23 higher than we expected.
  • Apple Watch. We were way too optimistic about the growth in the Apple Watch. Based on our estimates, Apple sold 3.6 million units, well below our 5.0 million projection. This growth rate looks very similar to the iPad after its introduction. We had expected higher growth since the iPhone installed base is so much larger now. Therefore, we’ll be reducing our estimates for Fiscal 2016.
  • Revenues. Overall, revenues came in 1.3% ($692,000) below our estimate. This can almost fully be attributed to the lower than expected Watch sales (1.4 million units x $450 ASP = $624 million).
  • EPS. We had projected $1.98 in EPS, just $0.02 above the actual.

Overall, we were ranked #12 of 33 analysts, both independent and professional, by Philip Elmer-Dewitt (here).

Guidance and Revised Estimates for Q1. Apple management guided to a mid-point of $76.5 billion for the December quarter. This is slightly above our $76.0 billion expectation. They set the low-point over $1 billion higher than last year’s actuals, deafening the crowd that was calling – not only for zero growth – but for negative growth. Tim Cook was also explicit when he said that iPhone revenues would be up, and so too would iPhone unit sales. It would not be a “trick” generated simply by higher ASP’s. It’s more unit sales. He was also clear about his view toward China. There has been no slowdown for Apple.

  • Macs. We’re bringing our estimates down from 5.80 million units to 5.75 million.
  • iPads. We’ll be raising our iPad estimates to 15.5 million units from 14.5 million units, due to the higher sales in Q4, the iPad Pro introduction, and increasing confidence in this category into the holidays.
  • Watch. We were disappointed by the numbers in Q4 and will be decreasing our estimate from 7.5 million down to 6.5 million. This is very similar to the iPad launch. In its second quarter, it gained 900,000 sales over the prior quarter (same as Apple Watch). In the next quarter, which was the Holiday quarter, it generated an additional 3.0 million sales.
  • iPhone. We’ve had our estimates at 82.5 million units and have decided to leave it as is.
  • Revenues. Based on these estimates, we’ve projected $79.9 billion in revenues. This equates to a 4.5% beat vs. the guidance mid-point. We feel very comfortable with this.
  • EPS. These estimates lead to an EPS of $3.48. This would equate to an LTM EPS of $9.62.

Fiscal Year 2016. We’re currently estimating FY2016 revenues at $255 billion with $10.63 EPS. Many investors are concerned that Apple can’t beat the “tough comps” coming up over the next few quarters. On the call yesterday, Tim Cook mentioned a single word several times: “subscription”. He views the iPhone as a subscription business, and so do we. The annual upgrade plan even more so, as well as the future roll-out of carrier billing via Apple. The growth in China continues to be more than robust and nearly 70% of the iPhone installed base has not yet upgraded to a 6/6s device. The negative foreign exchange headwinds will also decrease substantially after 1Q 2016.


Apple’s post-earnings reaction was very muted. The after-hours action was essentially nill. This morning, shares traded up slightly, and rallied slowly throughout the entire day. Shares are now sitting at the highest level since mid-August, over two and a half months. They ended the day near a critical make-it-or-break-it level, as you will see below. It certainly looks bullish, but keep in mind that we’ve got to get back above the $120 and 200dma level – and do so quickly to keep the momentum in a positive direction.

Inverted Head and Shoulders. Shares of Apple closed today just above the highs from last Friday, and at the highest level since mid-August. There’s a lot in the chart below. First, the inverted head and shoulders below is clear. It has technically broken the neckline ($117.50), and has a price target of $142. We love it when multiple pieces within a chart fit and work together. Interestingly, the Fibonacci extension levels all correspond exactly with very significant resistance levels. As you can see, each of them lines up – the 38.2% with the bottom of the post earnings gap, the 50% with the top of the gap, and the 61.8% with the all-time highs.

Additionally, the RSI has broken out of its downtrend and successfully tested it on the breakout. And the MACD is very bullish, starting from low levels and has room to run. Lastly, the 200dma is *still* rising, as surprising as it may be, and the 50dma is no longer falling.


Post-Earnings MACD. The MACD has risen into each of the five earnings announcements shown below. In two prior examples, the MACD continued to be bullish after earnings. In those two cases, shares continued to rally in a very significant way for many weeks after the report. In the other two examples, the MACD turned down immediately after earnings and acted weak all quarter. We see the MACD after yesterdays earnings continuing to act very strongly. That bodes well for the quarter.

AAPL MACD on Earnings

The Trend is Your Friend. An uptrend is defined as creating higher highs and higher lows. You can see that in the chart below. In mid-September, Apple created a higher low. In the past couple of weeks, it created a higher high than early September. Shares are back in an established uptrend.

AAPL Trend

IMPORTANT LONG-TERM CHART. The weekly chart below includes the 25 exponential moving average (EMA). We view that as a crucial long-term chart, since it has acted as support during uptrends and resistance during corrections. You’ll notice that we shaded each period of time during which shares saw a meaningful correction (well below a 50 RSI). After those periods, once the shares re-take the 25EMA, there has been a meaningful rally within just six weeks, and often continued for several more weeks or months. Additionally, upper Bollinger Band has been touched within 6-8 weeks each time.

Well, shares just broke through the 25EMA (as well as the 50 RSI level, which has been associated with the bull moves in the past). We can expect the 100% – 125% Bollinger Band level to be touched around the holidays. While that range currently sits at $130-$138, it will rise if price does.

AAPL Weekly EMA and BBand

Post-Earnings Bollinger Bands. Below, we illustrate each Apple earnings report. In those instances when Apple hits the upper BBand within the week of the announcement, we’ve shown it as a bold green line. You can see that during those quarters that quickly rose to the upper BBand, there was a quick and meaningful rally of approximately 20% in six weeks. In the one instance where it was below that level (11%), that’s because it hit the prior all-time highs, where it found resistance for a short period.

AAPL BBands Post-Earnings

NASDAQ (QQQ). The NASDAQ index is sitting at its all-time highs. Can you believe how quick that was?? It formed a pretty well-defined double bottom, which targets new highs near $119. We may see a gap fill down to the $110 level, or a re-test of the breakout point at $109. But the longer-term uptrend is still intact.


S&P500 (SPX). The SPX has retraced the large majority of its losses. It gapped back up above its 200dma, re-tested it, and has since lifted off. The markets are looking solid at this point.

SPX Daily

Long-Term Trend. The long-term trend continues to be up. SPX bounced off the trendline where it formed a double bottom, and has since broken out (target at 2170, roughly 4% above current levels).

SPX Weekly

Apple: A Pivotal Report

October 25, 2015

Welcome back, folks! Over the past three months, we’ve spent most of our time analyzing the Apple technicals on Twitter (you can follow our feed on the right sidebar of this page). With Apple releasing its fiscal 4Q 2015 earnings – and even more importantly guidance for the holiday quarter – on Tuesday, we wanted to prepare an update on our expectations. We will review both the fundamentals as well as the technicals, and our thoughts heading into the report.



So let’s look at this by category:

  • iPhone unit shipments tend to be slightly higher during 4Q than the prior quarter. This is largely driven by the introduction of the new devices in late September each year. While the prior (n-1) devices fall off a bit going into the release of the new devices, that dynamic is more than made up for by the annual surge at the end of the quarter. Based on the trend analysis we’ve conducted looking at the year-over-year (and quarter-over-quarter) growth in unit shipments, we’re adding 2 million units compared to last quarter and 10 million compared to last year. While it’s a big jump over last year on an absolute basis, the percentage growth is in-line with what we’ve witnessed in the past. Additionally, the move to a larger form factor is driving some additional growth in the 6-series devices. On a pricing basis, we’re projecting an ASP of $655. This equates to a $5 decline over last quarter and a $50 decline over last year. This is in-line with the 4S and 5S models, as a larger percentage of users purchase the n-1 device (i.e. the 6, not the 6s).
  • Mac unit sales will likely come in at 5.8 million units. This category continues to see growth, but is well-established at this point and easier to forecast than the iPhone and iPad categories which have seen varied growth rates over the past few years. Over the past four years, it has seen growth ranging from 22-25% over the prior quarter. That is a very tight and well-defined range. We are projecting growth of 21%, equating to 1 million more units than last quarter. Similarly, Macs tend to experience a $50 decrease in ASP between the third and fourth fiscal quarters. We are projecting a similar decline to $1,200 ASP.
  • iPad will likely see a further decline in unit sales. The holding period of these devices is far longer than we would have expected. We’re projected 9.5 million units were sold in 4Q, down 1.5 million from the prior quarter. We’re also estimating a minor decrease in ASP to $410.
  • Apple Watch has seen an enormous shift in sentiment over the past few months. The initial huge expectations has turned into almost an afterthought. We were surprised to see some of the extremely low numbers that others are projecting. We are projecting respectable growth from 2.6 million units sold last quarter (our own estimate, since Apple doesn’t disclose this) to 4.5 million units in 4Q. Tim Cook stated that there will be more Watches sold this quarter than last, and even more during the holiday quarter. Some took that to be his way of lowering expectations. In our view, he was simply stating the obvious. With the additional data point of both Best Buy and Target fast-tracking sales into as many stores as possible, it’s clear that these things are selling.
  • REVENUE. We are projecting $52.1 billion in revenues, which is 4% above their guidance. This would be the second lowest beat against their guidance over the past two years. We tend to have a conservative bias in our numbers, so feel good that our numbers are not only likely, but that there is more room to the upside than the downside.
  • EPS of $1.98 that we are projecting is $0.10 higher than consensus. The fact that we believe the risk to the upside is higher than the downside risk makes us comfortable that Apple will in all likelihood beat consensus for 4Q 2015.


Importantly, there is much more to the story than simply performing well last quarter. The guidance for the holiday quarter will drive the post-earnings reaction. During last year’s holiday quarter (1Q 2015), Apple experienced a huge beat vs. consensus, whisper numbers and even their own guidance. While they typically beat their own guidance by 4-7%, last year they beat their guidance by almost 15%. That has caused many to theorize that they simply “pulled” future demand into that quarter due to the spike in interest for the larger screen.

It’s a similar dynamic to what happened with the 5s device. After selling 10 million more iPhone 5 units in the holiday quarter than the prior year (4s), the transition to the 5s device only saw a 3 million increase. Share price started to decline in September 2012 in anticipation of these very challenging year-over-year comps. The fear at this juncture in the current environment is that we will see the same dynamic with the 6s device. Apple was able to sell 25 million more units in 1Q 2015 (74.5 million units) than they were able to in 1Q 2014 (51.0 million units)). No way Apple could beat a comp like that, right?


So why do we disagree with the general consensus?

We are projecting $80.1 billion in revenues and $3.56 EPS for the holiday quarter, based largely on the sale of 82.5 million iPhone units. There are a few dynamics we need to keep in mind here. Let’s first look at this from a “top down” approach, instead of a “ground up” approach.

Apple has never guided to a lower revenue number on an annual basis. Even in the weakest of their quarters, which preceded (and likely caused) the crash in late 2012, the still guided nearly $2 billion higher than the prior year actual revenues. They’ve been able to do this as the markets the products are available within and their market share continues to grow. Tim has continued to set expectations at a high level and has even gone so far as to send a letter to Jim Cramer explaining that growth in China continues to be robust. We do not believe he would be sending these signals had he expected growth to stop this quarter. Therefore, until proven otherwise, we have to assume that the historical dynamics will remain unchanged and that Apple will guide to a higher revenue number than last year ($74.6 billion). Furthermore, since Apple historically beats by 4-7% compared to their guidance, we know that they will not set themselves up to fail. In all of the quarters in which they’ve issued guidance going back to 2008, they have never come in lower than their guidance.

When you take all this together, it implies that current estimates for the quarter are simply too low. If they guide to a mid-point of $76 billion in revenues (just 2% above last year’s actuals), that sets them up for an $80 billion quarter. That’s just about exactly the figure we achieved when undertaking our “ground up” analysis above – by projecting unit sales and ASP for each category. It always gives us more comfort when multiple analyses line-up and point to a certain outcome.

TECHNICALS. Now for the fun stuff 🙂

Downtrend & Fib Levels. As soon as AAPL broke through the downtrend line from July earnings through early last week, shares surged. Significantly, not only did it break through every significant Fibonacci level, but it broke above the strong resistance level at $117.50 like it was nothing and closed above the $118.50 resistance level (dotted black line). You can also see the blue descending channel that looks suspiciously like an inverse head and shoulders pattern that has broken to the upside…

AAPL Hourly

Inverse Head & Shoulders. Speaking of the H&S bottom, see below. That’s almost as clear-cut as it gets. Don’t focus on the exact price of the shoulders. The premise is this. Shares form a new low price (left shoulder), then bounce to create a neckline. The bulls fail, and shares fall to a new low.  But the share price is able to recover to the same neckline area as the first bounce. On a subsequent drop, the bears fail and create a higher low – thus ending the downtrend (defined as creating lower lows and lower highs). Once the bulls are able to take price above the neckline, it’s a signal that a new uptrend is in effect (since there is a higher low and a new higher high). That is exactly what we’ve seen here. But we also have the important signals of RSI breaking through a nine-month downtrend (red dotted line up top) as well as a bullish MACD cross. We will be much more comfortable with the pattern if it’s able to break above the 200dma.


Bullish MACD Crossover. On the chart below, you’ll notice that we’ve seen a bullish MACD cross (green dotted lines) just prior to the four previous earnings announcements (black vertical lines). Two of these have preceded strong rallies, and two have preceded pullbacks. What’s interesting to note is that the two failed MACD crosses happened while price tested all-time highs on weakening RSI. That is no longer the case.

AAPL Daily Earnings MACD

Longer-Term RSI. While we’re on the topic of RSI, let’s look at a longer-term chart. There’s a curious recurrence taking place in the chart below. Each time the weekly RSI gets to a severely oversold level (i.e. deep into the red highlighted area) the shares have rallied to hit at least the top Bollinger Band, if not the 125% BBand level, within roughly 6 weeks. That equates to the $131-$138 level based on the current BBands, but remember the top Band will continue to rise with price.


Additionally, notice the 25 weekly ema on the chart above. It tends to act as solid support during uptrends, and marks a significant caution point when breached to the downside. However, each time shares have punctured back above this level, it has seen a significant rally.

25 Weekly EMA. Here’s a closer look at that 25 weekly ema. You can see the significance of this level. It’s also interesting to note that each time the EMA flattens, it tends to signal an inflection point in price. We just saw it turn back up slightly, which may indicate that shares are ready to resume their uptrend.

AAPL EMA Inflection

Daily Bollinger Bands. A very important piece of the puzzle is the BBands. This is a cautionary note heading into earnings. At the bottom of the chart below, we’ve included the %BB, which measures where against the Bollinger Bands that price is trading. We’ve provided colored circles for where shares sit along the BBands heading into earnings (red = top, green = bottom, grey = middle). Since the BBands measure standard deviation from the 20dma, it should be no surprise that shares tend to revert toward the mean. Historically, over the past three years, when shares are sitting at the bottom BBand (green), they rally after earnings; when sitting at the top (red), they either consolidate in the best case, or decline. It’s important to note that shares sat at the top of the BBands heading into both 2Q15 (April) and 3Q15 (July) earnings, and we saw a decline on both occasions. It’s important to keep this indicator in mind.

AAPL Earnings BBand

Bollinger Bands Over a Longer-Term. However, before thinking that we’ve turned into a raging bear, we’ve analyzed how share price tends to react to hitting the top of the BBands (100% BB). Interestingly enough, there is zero trend here. Out of the 24 occasions we measured below, 12 marked the top, and 12 marked either near-term consolidation, or a continued rally. The other aspect to note is that when shares did, in fact, continue rallying, the RSI leaped to the 80-90 level.

AAPL Daily BBands

CONCLUSION. Guidance will be critical here. We mentioned the BBands only because they were an important aspect to the prior two earnings announcements. We observed it both times but did not factor it into our investment decision. Based on all of the charts and fundamental factors, what we’re currently expecting is this. Apple will beat estimates in Q4 and issue guidance that implies an $80 billion quarter may be at hand. But we will not see a spike in after hours trading as we did for GOOG, MSFT, AMZN. Instead, we will see a more muted move over the next few days, followed by a rally to new highs as we enter the holiday season. We will be watching closely for clues over the next two days and re-assess as we head into the big announcement.

Apple 3Q15 (Fiscal) Earnings

July 20, 2015

Here we go again… Apple is set to report its fiscal third quarter 2015 earnings tomorrow afternoon. Our projections for the quarter are below:


iPhones. We expect 50.5 million iPhone unit sales, representing a 44% annual increase and a 17% decrease from last quarter (which included the Chinese New Year). The ASP will likely remain high at $640 per unit, down only slightly from last quarter. However, there is potential upside here as channel checks have indicated stronger than expected interest in the 6 Plus, which has higher gross margins and ASP.

iPads. Don’t need to spend much time on this one. We expect 10.0 million units at an average selling price of $420 per unit. There continues to be interest, especially on the enterprise side, but we see slowing sales until Apple refreshes this product line.

Mac. We have a relatively conservative estimate of 4.5 million Mac sales at a $1,200 ASP. This is consistent with last quarter and the year ago quarter; however, there may be upside in this category due to the new Macbook Apple introduced this spring.

Software/iTunes. There has been a trend to see a slight decline in software sales between the March and June quarters; therefore we expect $4.9 billion in sales down from $5.0 billion last quarter.

Peripherals/Other. This is where things get fun. Excluding the Watch, we anticipate $1.75 billion in sales in this category (up only slightly from last quarter). We will be watching the gap between this figure and the reported number, which will approximate the revenue generated by the Apple Watch. We’re currently expecting a conservative 3.5 million units at a $550 ASP. This would equate to $1.9 billion in revenues. We have not adjusted our unit projection in over six months, because there’s been a relative dearth of data points that would influence our analysis.

On the ASP side, we currently expect 66% Sport / 33% Apple Watch / 1% Edition. With the Sport, we’re modeling 60% buying the smaller watch at a $350 ASP and 40% buying the larger model at $400 ASP. With the Apple Watch, we are modeling a 50/50 split between model sizes with ASP of $550 and $700, respectively. Lastly, we’re showing 1% purchasing the Edition at an average ASP of $10,000. In our view, these are all conservative ASP projections. There is upside to each aspect of this analysis; until we have more information, we do not want to “count on” more aggressive fundamentals here.

REVENUES / EPS. We are looking for $50.5 billion in revenues and $1.94 EPS, driven by gross margins at 40.5%. This is our base case, which tends to err on the conservative end of the spectrum. We believe there is upside, especially in the Mac and Apple Watch categories. However, as we all know, the most likely category to shift the results significantly from our projections is the iPhone.

Guidance. Our current revenue projection for Apple’s fourth fiscal quarter is $53.8 billion. In order to generate a “beat” roughly equivalent to the previous several quarters, we anticipate management guiding to a range with $50.5 billion as the midpoint and gross margins at 39%.

Management Commentary. We will be getting our first official results on the Apple Watch, which may help to subdue the unfounded “flop” rumors that have been widely discussed. This is Tim’s chance to quiet the peanut gallery (assuming he has good news to share). Management may also discuss user numbers for the brand new Apple Music service and recently launched Apple Pay. While neither of these contribute much to the bottom line at this point, it may help to shift the sentiment and quiet the recent dissent. The more significant questions – from a revenue standpoint – will revolve around any recent shifts in demand from Chinese consumers for the iPhone. The crash in Chinese stocks has led many investors to the conclusion that Apple will take a significant hit. Continued strength and encouraging commentary will likely have a big impact on analyst expectations and may lead to meaningful hikes in 2016 projections… and a higher P/E multiple.

BONUS CHART. Based on our current (relatively conservative) estimates for the June, Sept and Dec quarters, we’ve updated the chart below. In case there was any confusion, it’s clear that EPS expectations drive share price. Investors are forward looking and tend to price shares based on the future six months. As you can see below, investors began pricing in the negative EPS growth roughly five months early – in September 2012. With our EPS expectations through the December report (in late-Jan 2016), shares should continue to appreciate.

AAPL Price and EPS Growth

UPDATE – BONUS CHART #2: The chart below illustrates AAPL’s PE range over the past seven years. Shares of Apple tend to trade within a 4-5x PE range for roughly 18 months before adjusting into a new range. It has recently been trading between a 15x-19x PE range, with most of the action between a 16x-18x range. Based on our expected $8.75 LTM EPS to be reported tomorrow, we’d expect it to trade between $131-$166 (15x-19x) this quarter, with a majority of the price action between $140-$157 (16x-18x). If the share price does not move, it will be trading at a 15.0x multiple come Wednesday morning. If, on the other hand, it keeps the same multiple as today (16.3x), it will be trading at $143.


Apple Second (Fiscal) Quarter Earnings

April 26, 2015

It’s been roughly six weeks since our last post (Thinking About Risk/Reward), in which we detailed our rationale for staying out of the market while we wait for a clear opportunity to present itself. Since then, we’ve taken a couple of swings at the $TQQQ – a leveraged bull ETF tracking the NASDAQ – as it retook the 10 and 50 day moving averages. Aside from that, we’ve been primarily in cash… waiting for the right opportunity to deploy it.

Discipline is the number one rule in investing. Entering and exiting positions based on emotions is an absolute killer. That’s why we’re waiting for Apple to report earnings before entering a position. Here’s what we expect tomorrow:

AAPL 2Q15 Estimate 2.18.2015

We expect China Mobile to add significant velocity to the iPhone business during the first three months of 2015, boosting top line revenues well above management guidance. iPads are likely to disappoint in our view, and will continue that trend for the foreseeable future.

We will most likely re-enter bullish AAPL positions on Tuesday *if*

  • They report north of $8.00 in LTM EPS,
  • Guidance comes in north of $46 billion for the third quarter,
  • The capital plan expected to be unveiled tomorrow satisfies the street, and
  • Most importantly: the chart and technicals react well.

Looking forward to the report tomorrow. We will unveil our 2015 full year estimates tomorrow. Many are discounting the Apple Watch, but it could be a significant driver of supplemental revenues / earnings in the quarters to come.