Apple Stock Get’s Reacquainted, Ever So Slightly, With Reality – As Warned By The Only Source To Call A Short On Apple

Apple should see a material dip, on top of the one that occurred after I indicated that I was short the stock on March 16th. Before we delve into my opinion, let’s peruse the news from 1 a.m. this morning:

WSJ: Apple Crunched in Nasdaq Rebalance- In a move likely to ripple across the stock market, Nasdaq OMX plans to announce a rare rebalancing of its Nasdaq-100 index, which will reduce the big weighting of Apple, which currently makes up more than 20% of the index.

Bloomberg: Apple’s Weight in Nasdaq-100 to Be Reduced as Microsoft, Cisco Are Raised

So, why do you think Nasdaq decides to reduce Apple’s weighting now? Well, the competitive pressures that Apple faces are nigh guaranteed to make it impossible for it to fulfill the pie in the sky expectations that are being built for it.  That in combination with a 20% weighting create a recipe for a guaranteed crash in the Nasdaq unless something was done about it. Signs of heavy reliance on on or two products for 70% of their profit, while sourcing the most important parts of those products from their biggest competitors, were starting to show. iPad 2 supplies are tight due to Japan’s woes, and Apple does not have the mobile computing product diversity to handle it like the 150 or so Android competitors it is battling. This means much more than just a gap in profits for the quarter. These companies are in race, and Apple is being forced to give up some of its lead due to diversification issues – issues that Android manufacturers (who are more diversified because there are so many more of them from different places) don’t have, or at least not to the extent that Apple does. Thus, Samsung, LG, Asus, HTC, etc. will be rolling out to customers who may have had an Apple iPhone or iPad.

This is also another (of many) massive triumphs of BoomBustblog research over that of the most esteemed Godman Sachs who put a $430 price target on Apple just as it was making all time highs and in direct contravention to BoomBustBlog’s stated logic. See Shorting Apple and Why Software Developers Can Make More Money On Android Wednesday, March 16th, 2011

I have finally started dabbling with Apple shorts and puts. My OTM S&P put positions were profitably stopped out due to trailings yesterday when the market recovered some of its losses. I have decided to use Apple in the place of the S&P puts for the time being. Medium to long term, the trade is more evident and obvious to anyone who is objective and follows BoomBustBlog. It is significantly more risky shorter term. Alas, there are marginal gains already, and once they accrue to the point of indemnifying my trailing stop, I will add more. After I finish the current leg of my global real estate research to be disseminated to institutions, I will offer tidbits of the modeling (I have already offered subscribers significant info on why I think Apple is a risky long play). From a contrarian standpoint, it may be safe to go short with tight stops, after all although Apple Gears Up To Combat The Margin Compression That Apparently Only It, Google & Reggie Middleton Sees Coming, we still have those guys over at West Street… Goldman’s $430 Target, Screaming Buy On Apple At Its All Time High Is In Direct Contravention To Reggie Middleton’s Logic – Who’s Right? Well, Who Has Been More Right In The Past? I have taken The Challenge To Goldman Sach’s Apple Proclamation One Step

Farther, Apple’s Closed System Risks Failure! Listen, everyone, regardless of what investment positions or tech products you may have in your stable, needs to ask themselves the appropriate “What if’s”. I have spurred the conversation with “Will Google Win The Mobile Computing War? Let’s Walk Through Where They Stand Now & How To Value Them”

Remember, I may not always be right, but it does pay to look at the track record…  Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best? More attention should be paid to the little guy, after all by now it is Now Common Knowledge That Goldman’s Investment Advice Sucks! Didn’t you get the memo? I’m sure many traders have spurned Apple due to the Japanese market being cut off right at the launch of the iPad 2, but the issues go deeper than that. I will cover it in depth at a later date, though.

Additional thoughts on the Apple short:

1. Note For The Few Realistic Apple Bears… Wednesday, March 16th, 2011
2. Buffet on Apple – Common Sense! Monday, March 21st, 2011
3. Competition Heats Up In The Mobile Computing Space On Many Fronts – Prices Driven Down Once Again By The Big Players Tuesday, March 22nd, 2011
4. How the “I Love Apple, There Is No Other Fever” Adds To The Attractiveness Of An Ever So Unpopular Apple Short Monday, March 21st, 2011

And that Research in Motion short alert given to subscribers is working like a charm – even more so if it get’s caught in  NASDAQ storm: Research in Motion Drops 10% After Hours, Precisely As We Warned Two Months Ago – MARGIN COMPRESSION!!! Thursday, March 24th, 2011

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