This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Can the Bears Get to Apple?

Stocks in this article: AAPLDANG

NEW YORK ( TheStreet) -- The next obstacle for the market is upon us. The bears are forecasting a no growth earnings season. They have moved on from European crisis mode and are now fretting about the impact of high commodity prices, decreasing Chinese growth and a weakened European economy. The past week has offered hundreds of articles on the topic .

The true test of an economic variable is the market's reaction to it. We will closely monitor the market's reaction to earnings season with the first few reports. It's worth noting that the Dow is showing increased downside volatility in the near term.

Apple

Over the past two weeks, we have had three days in which the Dow dropped more than 125 points. The Dow hasn't closed below 13,000 since March 12, but as I write this post the Dow is trading at an intraday level of 12,909 due to the worse than expected employment report. The Dow 13,000 level is a good barometer as we observe the next few weeks of earnings reports.

Our view, however, is a little different than the bearish view. We think that these lowered earnings expectations could not come at a better time. This is the perfect set-up that enables companies to beat expectations. Instead of the market being down, it has merely flattened out and is waiting to see what the next few weeks will bring.

Let's look at today as an example. Apple (AAPL) had every reason to be down $10. As 20% of the Nasdaq there is significant downside pressure when the index is down 40 to 50 points and yet Apple buyers overwhelmed the selling pressure as the stock went into positive territory.

In addition to the employment selloff, Apple was downgraded this morning on the thesis that wireless carriers are on the verge of cutting back iPhone subsidies that provide Apple with its $600 ASP. The thesis makes sense in a theoretical sort of way but here in reality we see carriers like Sprint (S) deciding to do whatever it takes to become an iPhone distributor.

Apple calls its own shots when demand is off the charts. Apple remains in charge when it comes to pricing power. This was the first downgrade to Apple since Colin Gillis downgraded the stock 60% ago in October of last year. The institutional demand from income/dividend investors continues to push this stock upwards.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,800.24 +81.24 0.46%
S&P 500 2,061.39 +8.64 0.42%
NASDAQ 4,713.9990 +12.1320 0.26%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs