This is the classic "markets bottom on negative news" that DeMark writes about. After nine months of arduous declines, today's event indicates that investors are finding value in Apple shares regardless of the uncertainty that awaits. It's hard to find a clearer sign that Apple has bottomed, but there is another.
Canaccord Genuity analyst T. Michael Walkley lowered estimates and its price target for Apple Wednesday. Walkley maintains a buy rating but lowered the price target from $560 to $530. Granted that's not much of a change and shadows the court ruling, but helps crystallize and clarify the market doesn't actually care anymore. Especially when Apple is only trading slightly higher than $400 a share.
Investors should exploit the conspicuous signal the market is proclaiming that even unwelcomed news isn't enough to drive the shares lower. Like watching fireworks last week, you can't miss it. Two weeks ago, I suggested selling put options in Apple to gain a bullish position with decreased risk. The idea was to sell October $400 strike price puts for $27.10 or more (opening fill price was $30). At a current trading price under $15, it's working out well.
It's not too late to enter, and in fact, watch over the next few days as the market digests the ramifications of the court case. If shares continue higher, I say DeMark's observations hold true once again. DISCLOSURE: Author does not hold a position in any stock mentioned.
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