Apple shares go a little sour after product blitz

How do we like them Apples the morning after?

There’s a morning after the night before feeling in the wake of Apple’s all-singing-all-dancing (almost) action-packed product unveiling last night.

For one thing, Apple shares, having gained as much as 4.7% during the presentation of new offerings led by its chief executive Tim Cook, closed mildly lower in a trading session which was purposefully extended well into the US evening.

The market appeared particularly impressed by the announcement of the Apple Watch, judging by the way AAPL stock reacted immediately after the news of Apple’s entry into its first new market in several years. The stock rapidly added another 1.5 percentage points to an initial gain of about 1.8%.

Apple shares then continued gaining, on the tech-focused NASDAQ index, until they reached their highest level of the day at $103.08.

Importantly, that level was just shy of the stock’s 2014 high of $103.74, reached on 2nd September.

The fact the stock failed to match its annual high last night is a fairly clear indication that while the market responded positively to Apple’s new products, the share price gains seen in the year to date were already deemed to be commensurate with the new ventures announced yesterday.

In other words, the market would have it that Apple Watch—and integral Healthkit platform for health and fitness monitoring, the excellent-looking new iPhone 6 and iPhone 6 Plus, and Apple Pay, were all largely priced-into the share price before they were officially announced.

Investors may also have in mind the need to provide a strong enough signal to Apple’s management to speed up the decision-making process around a much anticipated second round of share buy-backs.

The executive team at Cupertino, California have let it be known they’re considering pulling the trigger on more cash returns before the end of 2015, but have provided no further details.

The market knows Apple will enact share buy backs when the stock price requires them, relatively speaking. Hence, the anticipated cash return seems to be another reason to go into temporary selling mode.

Tim Cook off the hook

Another major point to note is that the blitz of new offerings—incorporating hardware, software and services—tacitly aims to resolve questions about Apple’s ability to innovate under its chief executive, Tim Cook.

The Apple Watch marks the company’s entry into its first new market in several years and the first new product to be developed and introduced under Cook.

Many analysts had strongly suggested yesterday’s events would be a key juncture for the CEO—a potential make or break day for his leadership and his tenure.

It appears Cook will be judged to have been a stronger CEO after yesterday than he was thought to have been before the new product announcements.

Even so, the market has clearly signalled a pause for the stock price.

I expect an orderly sell-off spanning a number of sessions over the medium term with options to call a halt at one of the major supports seen during the summer around $93.30 or $92.37.