Apple: Smashed, as Expected

This is an update on the post Can’t Resist Apple: Way Too Ripe, Way Too Juicy, Update1, Update2 and Update3.

I ended my last update with the following: “Apple (AAPL) rolled over and broke DOWN yesterday, falling $7.55 (4.18%) to $173.26.”

After releasing earnings last night, AAPL dropped almost 10% after hours, shattering all support levels. AAPL is now below the 20, 50 and 200 day EMAs, (blue, red and green lines). The $150 area my provide support as it is the 38.2% Fibonacci level.

I will take some profits around here, keeping my core short position and will add to that position on bounces.

Apple Falls on Outlook, Questions About Jobs's Health (Update2): “Apple Inc. fell 9.8 percent in early trading after its forecast for the back-to-school shopping season missed analysts' projections and questions resurfaced about Chief Executive Officer Steve Jobs's health.

Fourth-quarter profit will be $1 a share as sales climb to $7.8 billion, Cupertino, California-based Apple said yesterday. That compares with analysts' average estimates of $1.24 a share in profit and $8.3 billion in sales in a Bloomberg survey.

A slowing economy may make it harder for Apple to repeat its success in the quarter just ended, when it posted record sales of Macintosh computers and iPhones and better-than-expected demand for iPod media players. Back-to-school promotions and new product development also will curb profit margins, Apple said.”

I raged about the ‘invincible Apple’ philosophy months ago. In Update1 I ended the post with: “Ok. So, you’re house price is falling so fast you still can’t believe it and your mortgage is about to reset to a rate that ‘tastes like vomit’. You’re worried about your job security, despite the fact it costs you so much now just to drive to work that going in for a half day isn’t even worth it. You now deeply regret buying the SUV you don’t actually own, because you’ve traded your previous cars in so frequently that the lease payments on this one almost equal your pre-reset mortgage payments. How likely are you to be both willing and able to load up on shiny, expensive consumer discretionary items with big monthly costs such as the Apple iPhone?

Which is more probable, a surprise to the upside in a stock priced to perfection in a deteriorating economy or a surprise to the downside?”

Surprise. To the downside. Done and done.

Seriously though, was anything else really possible? With credit card delinquencies going vertical it doesn't really matter how fancy and cool that LUXURY, DISCRETIONARY gadget is. You still CAN'T afford it.