Thanks Salida, you made my year...or did you???

If you read my blog you know I had been calling for a correction in gold based on two factors. First, the chart was forming a textbook double-top that should have put fear in the heart of any investor, and second, the precious metal was simply overbought and due for a pullback. Even good ideas get ahead of themselves. Long-term I actually think gold is a buy. But what's the exact reason for gold's $300 pullback which actually helped me get back to even and then ahead for the year? For weeks there have been rumors that Salida, a Toronto based hedge fund that invests primarily in metals and energy, was giving up the ghost. Them along with Paulson we're rumored to be liquidating their holdings on the open market fueling the massive declines (it has been the the common thinking that losing hedge funds have been raising cash by selling their gold positions to cover margin calls or redemption's). They've denied these rumors of liquidation and I tend to believe them. I've attached their monthly performance letter which explains their massive fuck-up, causing them to be down almost 50% on the year. It looks like they continued to load up on precious metals and oil stocks into $1900 gold and $100 Western Texas Intermediate. Oops. Check out the letter for yourself.

Why no iPhone "5"??

The main reason the iPhone "5" was not released yesterday is because the chip they needed for LTE was not ready yet. They could have used the bigger chip already available in other LTE phones, but they would have to sacrifice that sexy new design we're all coveting. The table below suggests we could see iPhone "5" as earlier as Q2 of next year, but I would think it would be more like Q3.

Crushed

I told you yesterday I was setting up a "go for broke" scenario this morning and I covered all my shorts, got long some names, and held my Apple (AAPL). While I had predicted that the announcement today would take down the stock, I didn't listen to my own advice and remained heavily invested. What I underestimated was how much this market, nay, this world needed something magical out of Cupertino today. With China collapsing, Europe on it's way out and our government looking like a chicken with it's head cut off, all eyes were on Apple to show us something that we "had to have". Something that would inspire everyone to find a way to get $300 so they could acquire the "must have" phone. That is why when Apple (AAPL) disappointed the whole market began to sell off. I actually already bought some Apple (AAPL) off the news because I told you yesterday, this is an earnings story. They're still going to make $45 next year and at $356 per share, when you back out the $72 in cash per share they have right now, that's has them selling at a 6.3X next years earnings. For a company growing at 20% YOY, this multiple seems pretty low. The biggest danger in the short-term is if one of the 181 hedge funds that holds Apple (AAPL) decides to liquidate it could send the stock down another 20%. When big growth gets hit, it gets hit hard

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

iPhone "5": What to expect

Today we finally find out what the mythical iPhone "5" is. A minor upgrade dubbed 4S? New body design? Let me run down what I think happens here today.

1. Apple gives us glowing numbers and updates on how many iPads have been sold in recent quarters.

2. Apple will announce 2 phones. The iPhone 5 and the iPhone 4S, the latter of which being a cheaper pre-paid version aimed at EM in Asia.

3. Apple shows off improved voice-control capability.

3. Apple announces partnership with Facebook and Zuckerberg comes out to demonstrate the much anticipated iPad App.

4. Apple defines it's 3-screen strategy taking Apple TV form hobby, to serious strategy. I don't think they announce actual television sets, but they should outline their 3-screen strategy going forward.

The biggest one in doubt is is the second prediction as there has been a report this morning from a source "close" to the project that only one model will be released, the 4S. This would be a huge disappointment in the short term so I wouldn't buy any stock here until we get some clarity. Would I sell what I have? I'm not, but do as you must.

Update: 2 for 5...huge miss! I'll do better next time ;)

Just a disclaimer....

Before we embark on the Apple (AAPL) overload that will be the next 48 hours, I thought I'd remind everyone of a very dangerous, very real possibility that will hammer Apple's (AAPL) stock price if it's true. It's been mainstream thinking for a while that tomorrow, Tim Cook, Apple's (AAPL) new CEO, will unveil two versions of the next iteration of the iPhone; the iPhone 5, and the cheaper, maybe even prepaid, iPhone 4S. But there is some chatter this morning that there will be no iPhone "5", but only the 4S. Even I have posted evidence that there will be no major upgrade but only a slight bump in speed and camera quality. In reality, the star of tomorrow will be iOS 5, not the hardware introduced (unless they really overhauled the design like some leaked cases from manufacturers have suggested), but that won't matter to the street, because if we don't get iPhone "5" the stock will get crushed. To be honest, I see no reason to buy Apple (AAPL) today because given this possibility, I see very little short-term upside for the stock. There's a good chance we get both phones and still sell off in a "buy the rumor, sell the news" situation. If I wrong and we miss a little upside it's not the worst thing in the world. After all, the moto on this blog is "perserve capital". I think the next leg up past the $420 level will come when 3rd quarter results are released next month and we see how much money they made, and how many people have lined up to buy the new iPhone. Right now Apple (AAPL) is down $1.65 in early trade....does the street know something we don't?

P.S. There's even a rumor Stevie will show up tomorrow but I don't buy it....here's praying *fingers crossed*

FoxConn Brazil Deal DOA?!?!?!??

Last week, contrary to a rumor from JPMorgan, I suggested that the 25%, Q4, iPad order "reductions" were just a result of FoxConn moving some of it's operations to Brazil. If this iPhone 4S part pictured above is legit, the report leaked late last week looks like JPMorgan taking it down so they could get in under 4...or maybe Apple (AAPL) has peaked? You decide.......

Amazon's Kindle 'Fire' vs. Apple's iPad----Fight!

So this isn't going to be a "bash Amazon (AMZN)" post even though they seem to have their sites set on my favorite growth story, Apple (AAPL). First off, I mentioned earlier that I don't consider this competition for the iPad, but for Barnes and Noble's (BKS) Nook (which Wall St. seems to agree with since BKN is down 4.5%) so I'm not worried about it eating iPad market share. The Kindle 'Fire' actually looks pretty cool and it's hard to beat the price. I really like Amazon (AMZN) long-term and think they are where Walmart was 20 years ago. This is great company with rising margins and mo-mo like growth so they would be a nice add for any portfolio. Apple (AAPL) didn't really dip off the news and has remained flat all day, shifting between slight gains and losses. I think Apple (AAPL) needs to be bought hand over fist here since it's grossly undervalued, but there is one thing I'd like to point out. If the reports out of Asia are true and iPad demand is slowing, this will be reflected in the Q3 results slated to be reported next month. This could whack Apple (AAPL) even if they beat EPS estimates, but as I mentioned yesterday, I believe the 25% reduction in iPad orders out of China was actually just a shift in production to the new Brazilian plants opened by Foxconn. You know how these rumors start, some low-level managers at Hon Hai Precision (TPE:2317) and Foxconn (HKG:2038) (if you didn't know this already, stocks symbols in China are comprised of numbers, not letters) saw that orders were being yanked from their plants and extrapolated from that that Apple (AAPL) is reducing orders. These managers wouldn't be high up enough in the company to be privy to the fact that those orders were moved to Brazil. So what happens, JPMorgan bribes these guys for the info and voila, rumor started. I'm not saying this is exactly what happened but I disagree whole-heartedly with JPMorgan's report.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

Cautiously Optimistic

It's amazing how quickly things go from the "end-of-the-world" to "Paradise Island" nowadays. This is one broad rally with all but 2 of the stocks I watch rising over 1%. Volume is pretty normal out of the gate, but will see how the day unfolds. As much as I'd love to jump into the names that are rebounding like Baidu (BIDU), Arcos Dorados (ARCO), and Wynn Resorts (WYNN), I think it's best to continue to be cautious here. We've been following the pattern of pricing in a "smooth" default in Greece before it actually happens, and then at any sign we were wrong we sell of, and we sell off violently, hence my caution. The lows of the year held again, the best contrarian investor out their, Doug Kass, has called a bottom, and investor sentiment is almost as bearish as the 09' bottom. These are all very positive signs, but any bad news out of Europe will take precedent over anything else. I'm still buying Apple (AAPL) and Alexion Pharma (ALXN) as I continue to believe these companies will buck any macro trends. In fact, I'd like to talk about the report form JPMorgan yesterday citing parts suppliers, that Apple (AAPL) cut iPad orders for Q4 by 25%. My sources are confirming something I suspected the minute the report dropped and mentioned twice twice yesterday. Not only is Apple diversifying it's supply chain in Asia, it is moving an unknown amount of production to Brazil. How much you want to bet that "unknown" amount is 25% ;) Even if we do continue this rally, we should take a breather the next couple days because we've come up so quickly. I'd lighten up on your aggressive longs and add to any solid shorts as I think tomorrow we could see a pullback. If you have any shorts not working out, like the Fossil (FOSL) puts I bought before the big rally yesterday, than don't sell them for a loss, wait for tomorrow to unload. If you don't have a short position in gold or silver, I like starting one right here. Both precious metals are rising hard today and I think they have a good 10%-15% downside form here. Put on half what you'd like to short today and wait to see what happens. We could see $1700 before $1500, but I expect $1700 to act as resistance if we do get there. The Euro is also rising today and I'll probably add to my shorts via the Proshares Ultrashort Euro ETF (EUO) by day end. Regardless of how the European debt crisis unfolds, I belive the Euro comes out the other end much cheaper than today. I'll be using days like this to add to my position and look to start covering around $1.28-$1.30. Don't forget you can always check the twitter feed to see my trades live.

This is not a recommendation to buy or sell any securities. DAK was long AAPL, ARCO, BIDU, ALXN and EUO, and short FOSL at time of publication but positions can change at anytime.

Two iPhone Models to be Released Oct. 4th

When I posted the above picture a few days ago, I speculated that Apple (AAPL) would not be releasing a major upgrade to it's next-gen handset and would instead release the iPhone 4S which would be a major blow to the stock. Apparently I was half right. Today the word is that Apple (AAPL) will release two versions of the iPhone on Oct. 4th, the redesigned iPhone 5, and, an updated iPhone 4 dubbed the "4S" that will serve as the companies low-end offering. 

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

Chink in Apple's Armor?

This morning, in a rather off-putting note to investors, JP Morgan reported that Apple (AAPL) has cut orders for parts of it's iPad 2 by 25% for the 4Q, the first such cut JP Morgan has ever seen. This seems like a glaring blow to Apple (AAPL) which has been invincible up to this point. I do believe this report is disturbing but not because Apple (AAPL) is faltering. Apple (AAPL) is far from off its game as this latest report shows they are still gaining market share in a market they created and dominate. This report is much more telling of the global economic picture, specifically Europe, and continues to make me think I've underestimated the global slowdown. When a "recession proof" company like Apple (AAPL) has to cut it's orders, it's an ominous sign. Let me also stress that report has not been substantiated. Also, Apple (AAPL) could just be diversifying it's supply chain as numerous reports have stated the last few weeks. I'm betting on the latter.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime. 

Good Morning

Precious metals are falling again this morning after the CME's counterpart in China, the Shanghai Gold Exchange, followed CME's move on Friday and raised margin requirements on both gold and silver. Silver is the big loser plummeting more than over $1.40 after margin requirements are raised more than 20% from 15% to 18%. Equity futures are rising off a statement out of Europe promising more "stimulus". JP Morgan released what must be the first negative report on Apple (AAPL) in years, claiming their sources indicate a drop in 4Q iPad orders. These claims have not been substantiated but they very well could be true. Somehow I'm not worried.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

Danger Will Robinson

This picture snapped by an ATT employee off their computer system is disturbing. It's pretty compelling evidence Apple (AAPL) is releasing "iPhone 4S" which would imply only minor updates to it's next gen handset. With the street anticipating a complete refresh this could bring Apple (AAPL) back down to earth after it's swift rise to a record $420 from $365 in only a few weeks. As goes Apple goes this market so if we get a breakdown in the "best run company on earth" it could spell disaster.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

Suppliers start assembly of iPhone 5 for Oct. Launch

Rumored iPhone "5" front bezel showing edge to edge screen

Japanese site Mac Otakara is reporting that Foxconn and Pegatron have begun assembly of the rumored next gen iPhone for an early October U.S. launch (Late Oct-Early Nov for Asia), according to "Chinese sources". Foxconn will brunt 85% of the load and Pegatron will pick up the rest. Apparently iOS 5 isn't ready yet so the devices are being stocked without packaging until it is.

DAK is long AAPL