Perfect- A shiny Apple with a Worm in it

Not too hot, not too cold and the initial move anyway looks like exactly what we were looking for, what am I talking about, AAPL as an excuse to move the market that the simple CNBC investor can understand because they sure as heck won't understand why we bought all of longs last week when we saw smart money buying the market last week!

In essence, theory or now reality, AAPL was the scapegoat we were looking for, the thing CNBC could point to and say, "The market is higher because of AAPL earnings", when in truth the market is higher because that was pre-ordained last week.

Honestly, AAPL's results kind of stink, but remember I said, "It's not the news, but the reaction to the news"? Well Wall St. influences that to a large degree, look at CAT's earnings which were a disaster and it closed up almost +3%!

Here's why AAPL is perfect...

AAPL Earnings...

Revenue: $43.6 billion vs. consensus of $42.3 billion BEAT

EPS: $10.09 vs. consensus of $9.98 BEAT

Apple Boosts Buyback and Dividend! GREAT NEWS

Guidance for Q3 revenue at $33.5-$35.5 billion, below the estimated consensus of $38.4. 

Do you see it?

Looking at the Earnings and probably (although I REFUSE to turn on CNBC) all over the financial media, the headlines are "APPLE BEATS!"

As far as DUMB money  is concerned, the beat is reason to celebrate, to buy AAPL, to say, 

"Apple is back!!! I'm going to be able to sell my shares I bought at $700 for $800, I'm so happy I held my kids college fund and took that -40% loss, I knew Apple would come back!!!!"

It's because that's how dumb money thinks, they are lazy, they don't read beyond the headlines and more importantly (something Wall St. can control in After-hours), they take price action as confirmation and in After-Hours no less!!! 

"But wait a minute Brandt... You were saying there's something going on with AAPL!"

I said AAPL has some incredible charts, someone seemingly has been buying it by the boat load, but that's only so they can sell it at a profit.

The one thing dumb money doesn't get and for the most part, THE ONLY THING WALL ST. CARES ABOUT, GUIDANCE!

In other words, the way Wall St and Dumb Money look at earnings are totally different, dumb money looks for the headline beat, Wall St. could CARE LESS what AAPL did last quarter, the only thing they care about is sentiment toward what AAPL will do next quarter and there's where AAPL really stunk the joint out.

"Guidance for Q3 revenue at $33.5-$35.5 billion, below the estimated consensus of $38.4. "

Thats to 7.5% to 13% less than EXPECTED! 

That's a HUGE MISS in the only area Wall St. cares about for most companies. What a company already did is irrelevant, the only thing is there might be some information helpful toward figuring out the future like profit margins, trends in sales, etc.

So assuming the "AAPL is GREAT" sentiment holds up through regular hours (which I think Wall St. had already guaranteed no matter what AAPL's earnings as they obviously bought AAPL in size), then...

We have the best of both worlds!

We have our short term rally that we prepared for last week  and just so dumb money never catches on to what really drives Wall St., the AAPL earnings will be a nice, simple reason why the market is behaving the way it is.

On the other side, we are expecting a nasty turn down after this run is done, AAPL gave smart money EVERY REASON TO BE  A SELLER TODAY IN MISSING GUIDANCE! When it comes time for our downside reversal, Wall St. has motivation right from the very same earnings that drove the market higher in the short term!

AAPL use to always pull the "Scotty Trick" from Star-Trek, tell Captain Kirk it would take 30 minutes to fix the Warp Drive AND THEN LOOK LIKE A HERO WHEN IT WAS DONE IN 10 MINUTES, in other words, guide low and beat big on earnings.

AAPL lost its touch. AAPL was a cult following, an underground movement, those few artsy people in the know and they absolutely HATE that EVERYONE owns an AAPL something now, they hate the big, sparkly Apple Stores and their "Genius Bar" and they hate that Apple wants to make an I-Phone everyone can afford. AAPL lost something when Steve Jobs departed.

You probably remember, when the I-Phone 5 came out, after watching the unveiling I posted, "This is the first Apple product I've seen that is evolutionary rather than REVOLUTIONARY".

I won't renew my 2 year contract with AT&T because I don't want an Iphone 5 for 2 years when it hasn't even caught up to Samsung! 

Don't forget my chart of what happened to MSFT once they declared a dividend, Growth stopped, the lateral range began, the same is going to happen to AAPL. The glory days of AAPL aren't that far behind the glory days of Howard Stern, but for now, this is EXACTLY WHAT WE NEEDED!