This Day On The Street
Continue to site
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

Hold Off on Apple

This article originally appeared on Jan. 27, 2014, on To read more content like this plus see inside Jim Cramer's multimillion-dollar portfolio for FREE... Click Here

The market's bounce this morning has left people wanting. After the market went out at the lows Friday, a rebound is about the last thing most of us probably wanted to see -- because, in my view, Friday wasn't enough to be considered a wash-out move. Today's action so far has reflected that.

Issues are still lingering overseas but, I believe news from abroad has a different impact on the market vs. anything domestic. Even though it's more readily available than ever, many traders appear to need more reinforcement of it -- either it takes longer to sink in or to realize the potential impact on markets, or folks simply do not believe anything they are hearing.

Meanwhile, over the last two hours of trading I've been watching an inverse cup-and-handle pattern form on the five-minute chart of the SPDR S&P 500 (SPY). It may not be huge, but does look to point lower, around $177.35, for a target. I'd like to see a wash-out in the next day or two, but then I'm very heavy on cash at the moment, so I am talking my book.

Apple (AAPL - Get Report) will be the big one tonight, with the company set to post earnings after the close. Options are fluctuating, but they're pricing in a share move of between $29 and $30 by the end of the week. If the stock climbs above $570, I could see it blasting all the way to $600 in a very quick fashion, as the resistance and upside target both lie between $570 and $575. Any downside moves would find support around $530, but if that area gives way I'll be looking for another retest of $503. In other words, I think a more-than-$25 move is very possible at this juncture.

Apple does look coiled nicely to me, but I was just talking to another trader with whom I often look at earnings trade -- and, after our discussion, I just can't help but think I need to sit on my hands right now. It is tough to just buy Apple options straight-up, because if the stock is flat on Tuesday, that would just crush the premium. But it's only Monday, so any type of combination trade will need time to really achieve a solid return

Must Read: Cramer: Facebook Is Fastest Growing Big-Cap Stock in America

It is hard to recommend sitting on the sidelines, especially when so many folks are looking for an excuse to trade Apple. Yes, I think the company will beat expectations, but I'm a little wary on guidance and sentiment has been horrid overall. On the plus side for bulls, I don't think you'll see Carl Icahn out with anything negative, but his words seem to be losing weight faster than Billy Halleck.

So, for me, I think no trade is the best trade for Apple into earnings. I will maintain my long-term position, but that will be it for now.

At the time of publication, Collins was long AAPL LEAP call spreads, SPY puts, short AAPL LEAP put spreads.

  Timothy Collins has worked as a financial adviser since 1999, focusing on portfolio customization, with a concentration on correlation arbitrage and risk-managed growth. He started Collins Capital Advisors in 2007, which evolved into TangleTrade Management, LLC. Currently, he operates Retro Wall Street, a site focused on education, trader mentoring and humor.  You'll find him spending his days in the Retro Wall Street chat room.

Prior to joining his first firm, American Express Financial Advisors, in 1999, Collins worked as a staff accountant for United Information Systems in Bethesda, Md. He has also worked as a financial analyst for Securities Pricing and Research in Annapolis, Md. Collins is a graduate of McDaniel College (formerly Western Maryland College), with degrees in business administration, economics and sociology and is a winner of the Bates Prize.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 15,862.28 -342.69 -2.11%
S&P 500 1,830.73 -49.32 -2.62%
NASDAQ 4,217.2240 -145.92 -3.34%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs