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Yesterday trading in Apple and BlackBerry was a show of contrast.
Apple rose about 1% and BlackBerry fell 4.6%. Of interest is that money flow was negative in Apple while the stock was going up and money flow in BlackBerry was positive while the stock was going down.
Apple had lots of good news. There was excitement from the rumors of iWatch. There was positive anticipation of what Tim Cook would say today at the Goldman Sachs conference. Apple was also experiencing a tailwind from David Einhorn’s revolt against Apple.
In contrast, BlackBerry had two pieces of bad news. First, Home Depot decided to replace BlackBerrys with iPhones for many of their employees. Second, an upstart phone carrier Solavei introduced Z10 for a price of $999 in the United States ahead of major carriers Verizon, AT&T, Sprint or T-Mobile. In my analysis, this was bad news as it demonstrated BlackBerry’s lack of control over the launch of Z10.
My algorithms calculate money flow by subtracting the value of trades made on a downtick from the value of trades made on an uptick. They further dissect the tick data to detect foot prints of smart money and calculate net buying or selling by smart money.
Even though BlackBerry stock was falling, it experienced a positive money flow of $17.79 million. This was not all mom and pop buying. The money flow calculated only from block trades into BlackBerry was also positive $11 million. Block trades are indicative of institutional activity.
In contrast to BlackBerry, Apple saw a money flow of negative $274 million. Institutions were also selling as the money flow calculated only on block trades was negative $229 million.
Calculating money flow is science, but interpreting it is an art. My interpretation of the positive money flow in BlackBerry is that much of it was short covering. My algorithms detected aggressive short covering several times during the day. For reader’s reference, 129.4 million shares of BlackBerry have been sold short out of the public float of 467.70 million.
Confirming my interpretation is my proprietary Smart Money Flow Indicator that showed smart money net selling of about $7 million. The point is that while overall money flow in BlackBerry was positive, Smart Money Flow was selling.
My interpretation of the negative money flow in Apple is that the muppets who were fed Apple at higher prices by Wall Street were reducing their positions. Confirming my interpretation is our proprietary Smart Money Flow Indicator that showed smart money net buying of $126 million. The point is that while overall money flow in Apple was negative, Smart Money was buying.
Analysis of the news and trade data from yesterday has not changed the potential short position on BlackBerry and continuation of the short-term long trade on Apple. The chart shows the progress of the trade.
About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com. Follow me here. Subscribers to The Arora Report are long Apple from $131 and have already taken partial profits on 90% of the position.
