Meta-Trader - Lifting the Bid

Welcome back Meta-Traders.

Sometimes in financial markets, money just pours from the sky. And all you have to is step outside and take a drink, or stick your hand outside with a glass if you don't want to get wet. It was one of those rare times this week in US stocks.

You know I've been watching Apple computer. After the big gap up after earnings back on Jan 25, the stock peaked at about about $455 then pulled back to the $440s. I picked up some stock when it quietly broke $460 last Friday Feb 3rd. But at $460 a share, 100 shares costs about $46,000 which is no chump change. So I did the next best thing and bought the March 400 calls for about $7000 for less than 1 point premium over its intrinsic value.

During the process, I had a chance to watch the Market Depth screen or what used to be called Nasdaq Level 2 for AAPL as shown in the screenshot above. Its a thing of beauty to watch, bids, on the left, offers on the right, time and sales scrolling on the right side. And with an active stock like Apple, its constantly changing with the ebb and flow of supply and demand. Its an amazing amount of information and fun to watch, for a little while anyway.

Anyway, in the level 2 screen above you can see the Bids stacked up on the left with 5 different market makers at the bid and only 1 at the Ask. In that case I would say the stock was well bid. Also, there is not a lot of supply and with so little stock for sale, offers quickly evaporate and sellers are quick to lift the Ask on whatever they have for sale. Why be in a hurry to sell something that is constantly going higher?

When I pulled the above screen shot on Wednesday the stock was at $475. And since the stock made it all the way to $475, what's the odds is going to $500? Pretty darn good if you ask me.

Anyway, the stock closed on Wednesday at $476.68. It opened on Thursday at $480.95 and closed the day Thursday at $493.17. It blew through the $480's without even a daily close in that 10 point range! We didn't see $500 on Friday as I expected, but we had a high print of $497.6 and I'll be watching that price level next week for a further upside breakout.

What's all the fuss with AAPL, are we chasing tulip bulbs here? The stock has a 60% growth rate with a PE of 10. Cramer says you can pay up to 2X the growth rate. If we go that way we get $6000 a share, clearly a ridiculous number. So what if APPL sold at just half its growth rate? In that case the stock would be $1500 a share or 3x where it is now.

Now clearly at some point the law of large numbers kicks in - APPL can't keep growing earnings at 60% for ever. And with a market cap of 428B, its as a bigger market cap than IBM, Amazon and Google combined. But if you look at it in terms of market share, AAPL is not the market leader in the Smartphone or the PC business. And there are surely millions of people in China who want to buy iPads and iPhones.

Speaking of China, my favorite restaurant stock YUM brands came out with excellent earnings this past week (due to strength of sales in China) and the stock briefly got out to a new all-time high but has since pulled back.

On the Forex side, it was a slow week. After a nasty string of losses, we finally had a winning trade in the Atinalla portfolios. Atipaq Full Portfolio and Sunqu also had some good results while Coatl H1 Live and Amachay Demo went into the negative for the year.

Also, I finally got paid the trading bonus due in my FXDD accounts and you can see those deposits in the Atinalla #1 and Atinalla Custom accounts.

That's all for now, enjoy your weekend and get some rest.