OK Today Apple (Nasdaq:AAPL) will make the big announcement that everyone knows is coming. The 5 will come out. We all expect something very cool. We all know they probably have something more in reserve but this should be very compelling. Traders want to take positions based on this announcement. How many times do you think you can make money on major news when Apple is a master of new product enhancements and announcements.
Everyone is suddenly discovering that the new device will drive profits for many years to come. What you did not know that? So any stock price activity will be very frothy and if you like that black box high frequency approach go ahead. There is an off-chance the stock will disappoint; after all how often can a super juiced announcement work. Statistically we know they will stumble somewhere.
Apple needs huge drivers to maintain earnings. So if the 5 is huge that’s what they need. If the PE is pushed out it will be hard to justify on more than just hype about the future. So the bottom line for the skeptics is to watch the announcement; closely. But it is not enough to make a fundamental buy or sell decision.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti