So, how should this news be interpreted? Which one is more important for the ‘big fruit’?
Well, lets start with Citi downgrading it to neutral. It’s definitely not what you want to see if you’re a bull. Like I said, Apple is sitting on some key support and this upcoming week is going to be very important for its future direction in the next 3-6 months. If you’re a bull on Apple, you can argue that an analyst downgrade holds very little significance since there are new ones coming out all the time. Every analyst wants to say that they nailed the ‘top’ or ‘bottom’ of Apple, so every analyst constantly changes their price targets. Jumping from 700 to 500, 450, back up to 625, there seems to be very little significance in a downgrade. Nothing matters more than the price action… that’s what makes the money.
Switching gears and moving over to Apple’s blow away sales number… more than 2 million iPhone 5’s sold in China within a 3 day span. Quite a staggering number for three days, and one that the bulls wanted to hear. The timing couldn’t be any better! It’s a very hard number for the bears to argue, and they pretty much have to hold their tongues and pray that the price continues to drift down on the downgrade by Citi.
This headline is important in the case that the ‘buzz’ is back for Apple. The whole ‘buzz’ that made it rally from $150-$600. Someone in the U.S. could easily argue that the ‘buzz’ just doesn’t seem to be there, like it was when Steve Jobs was in charge, but guess what… Apple sells overseas as well! This argument seems like such common sense, but usually overlooked. It’s obvious that people in China are currently swarming over Apple products and is very important for Apple’s long-term picture.
When breaking both of these news articles down, it’s obvious to me that the blow away sales in China are more important for Apple then Citi’s downgrade. Sales are what drive companies, not analyst downgrades!
Author: Peter Nitso