What Will Be The Fate Of AAPL’s Stock After The Earnings Report?

Will Apple’s (NASDAQ: AAPL) shares jump after the earnings report due today? Or will the stock fall with investors taking profits? The earnings season is always characterized with uncertainty. What is certain, however, is that the last two days have seen investors pull away from stocks such as Google (NASDAQ: GOOG), General Electric (NYSE: GE), Bank of America (NYSE: BAC), and IBM (NYSE: IBM).

In an article on Seeking Alpha, Jason Schwarz noted that AAPL’s stock performance this year has been similar to that in 2007, when the first iPhone hit the market. Terming this kind of stock action as a ‘catalyst trade,’ Jason said that Apple’s stock is responding to specific catalyst events for the first time since the recession began. “After the earnings report we’ve got the iPad 3G US release, we’ve got international iPad pre orders, we’ve got the international iPad launch, we’ve got the iPhone HD release, we’ve got the iAd platform introduction, then we’ll have the iPod refresh with LaLa implementation, then we’ve got the holidays... The pace of innovation at Apple is unparalleled.”

While AAPL seems to be on track to reaching the $300 mark, the performance in the near term is still uncertain. “Investors must be careful not to fall into the trappings of greed,” While investors seem compelled to take on unnecessary risk following a $30 jump in after-hours trade, they should remember the correction that took place after the first earnings report following the iPhone launch. The earnings report today is also the first following the iPad launch. And history may repeat itself, given that the Dow is up 1000 points and AAPL is up $50 in the past couple of months. “I’m advising that whatever strategy you decide upon you have cash available to take advantage of a selloff if it does occur. I wouldn’t add any exposure before the report but I will be ready to add a significant allocation of option LEAPS in the days and weeks that follow. I’m content to let my long term core position in Apple ride and that’s it.”

The expectations from Apple as well as AAPL’s share price are both high. AAPL may try to dampen the expectations a bit with their guidance due tomorrow.

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