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AAPL: Be Careful Much Higher

July 7, 2008 11:16 PM

apple.jpgAAPL chart says long above $164 and short below $192.24. So this is a tight range (for a stock like AAPL). I am concerned a bit about valuation but far more concerned about the overall market. For the valuation followers, on a PEG basis AAPL is 60% higher than RIMM. So for anyone that believes RIMM is grossly overvalued, you have to believe the same about AAPL. Personally, I do not much believe in valuation unless it gets to an obvious extreme. Even then, you HAVE to wait for a signal to short, IMO.  

This is why I just do not believe you can trade on valuation. If RIMM and AAPL had the same exact PEG, RIMM would be over $180 or AAPL would be near $90. Take your pick. I know I have beat this topic to death, but you can see that the market is not rational. Stocks do NOT trade on valuation, at least for short term, meaning a year or more. The ONLY reason RIMM is falling is they warned on earnings because of marketing and R&D related to new phones. Now the RIMM chart looks ugly and it is in trouble, chart wise. If they had not, RIMM could easily be $180 here. Would RIMM be overvalued at $180? Probably. Does it matter? No.

Point being, people can easily make the argument that AAPL is grossly overvalued here - but it can go much higher. I just think there are easier trades on the board. Why fight the between “this and this” battle? Let others do it and move on to something else.

I gave three FAR easier trades today, IBM, BMC and JOYG. All three were winners in a down market. When stocks get “in between numbers”, why not just leave them alone and trade something else where there is clarity? I see no reason to fight a tough battle until you see who wins. Move on and let other’s fight it out.

Written by Tom@StockBlade.com · Filed Under AAPL 

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