360 Degrees of Apple

Answering the Phone Question at Apple

By Cody Willard

This was originally published on RealMoney on Nov. 15 at 3:06 p.m. ET.

Did somebody mention a bull market in an all-out steady-rally phase? It is what it is.

Meanwhile, how about this rampant speculation about a soon-to-be Apple iPhone? We all know that Apple should get into this business, and for years, I've been answering interviewers' questions and readers' emails about this possibility.

Yes, it's sure to happen, but probably not as quickly as most people want.

I do believe that, if Apple really is likely to roll out a phone, 2007 is the year it will happen. With the de facto standardization of the iPod already in place, the phone would be a hit with consumers.

Bear Stearns is projecting that a phone could add 70 cents a share in earnings and $6 billion in revenue for Apple next year. Of course, it would depend on the timing of the rollout to reach such numbers, but any Apple iPhone would surely crank out a new profit source for the Cupertino, Calif.-based company.

However, this is the same company that has misled investors about executive payouts and therefore earnings leverage of investors' shares for the past decade or so. I'm referring to the shameful options-backdating scandal.

At any rate, as much as I'm disgusted by the lies, I've been long Apple since the dawn of the iPod and continue to hold it, partly because of the earnings leverage that the iPhone would entail.

At time of publication, Willard was net long Apple.

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Apple: A Technical Look

By Alan Farley

This is an updated version of a snapshot included in The Daily Swing Trade on Nov. 10 at 6:30 p.m. ET. For more information about The Daily Swing Trade product, please click here.

Apple has been outperforming the broad tech sector in recent weeks and is currently trading at a 10-month high. But the stock is now headed straight into major resistance at the January top near $86.50. This price level should invite considerable profit-taking, as well as aggressive new short sales. This predicts that downward pressure will stall the uptrend for weeks, or even longer.

It's hard to recommend buying stocks with possible double-top patterns, and this one is no exception. Current shareholders should use this leg of the rally to take well-deserved profits. New longs are at substantial risk as this stock moves higher. It's strongly recommended that they guard profits with tight trailing stops or get options protection to dampen expected volatility.

At time of publication, Farley had no positions in any of the stocks mentioned.