[Analysis] Apple, the last hope for bulls and it's not good

26 Eyl 2022

The biggest weight on S&P, Nasdaq, and Berkshire Hathaway.

Apple is now more than 40% of Berkshire Hathaway's portfolio.
Rewind to 1997, Coca-Cola was the darling stock of Warren Buffett and it took up 37% of his portfolio.
Coca-Cola back then was different. It was like how Apple is now. It was flooded with cash. It was a growth machine, acquiring small companies left and right.

Then, in 1999-2000, the dot.com crash happen. Buffett starts cashing out his Coke to weather the shitstorm.




"But but but... Coca-Cola is not an internet bubble company" you say

Well, if there is a financial market crash, a smart fund manager will cash out their overgrowth holding at the peak and hold cash. This will allow them to buy a shitload of cheap, overly beaten counters once the crash is over.



So.. for those who are taking solace that Buffett is still holding Apple, it is HIGHLY likely that he's not going to add more. And it is ALSO HIGHLY LIKELY that he may start cashing out because Apple outperformed the broader market. He will hold the cash until the next opportunity comes around. After the dot com crash, Buffett unloaded his Coca-Cola and held 50% of his portfolio as cash for an extended amount of time.

Why is it a good time to cash out Apple (if you are Buffett)?
Because... all the clueless Gurus and Retail investors are buying up Apple because "bUy tHe StRonK SToCkS!!! bE GreEdY whEn oThErs ArE FeArFuL!! Hur Dur dur~~~~"

Guess who's going to sell Apple to them? The same man who said, "Be greedy when others are fearful". If you are buying Apple now, you are NOT the smart minority buying dip when 90% are fearful. You are actually the majority 90% being greedy because you are blindly scooping up an obviously "strong" stock that is about to go boomz.


Apple has a shit Q3 earnings



Look at the numbers. Revenue growth has a pathetic 1.79%. Net Income actually contracted! This is not the sort of earnings that can break all-time highs. Apple's price has now fallen below the 3Q earning price.


The current Apple support price is 150. We are waiting for one catalyst to send this stock below 130. It could be Q4 earnings. We think the Q4 earnings will be a disaster. Or.. it could be Buffett cashing out.
Can Apple rally? Of course, it can, but it will be a lower high. It will be a bear rally with resistance at 165 and 175. We do not think 175 resistance can be broken this year. Even 165 might be hard to break.


Don't be a clueless bull folks.


Verdict:
Bearish. We hope to see a bit of rebound to get a good shorting price. The current price is not attractive to short.
Highly likely for June's bottom to be broken.