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Apple’s Strong Fundamentals Trump Questionable Technicals: Pros

Tuesday, 24 Apr 2012 | 5:32 PM ET

“35 million iPhones, I didn’t expect that. The Street didn’t expect that,” says a stunned Joe Terranova after sifting through the latest earnings from Apple .

In extended trade Apple stock surged 7% up to $600 after Apple easily beat Wall Street estimates, driven by strong demand for its iPhones and iPads.

And that $600 level changes the trade – says Terranova.

Apple Surges After Earnings Beat
Dissecting the day's major business news, including Apple's upbeat earnings surprise, with the Fast Money traders and Brian White, analyst at Topeka Capital Markets.

“Coming into earnings the chart was broken,” he says. There was talk that Apple was in trouble, it traded below its 50-day moving average of about $572 - a sign of technical weakness.

“But now, above $600 the negativity is starting to heal.”

In other words the technicals had suggested a bigger sell-off was coming but in the wake of results Terranova now believes fundamentals – such as those 35 million iPhones -- will trump technicals and the stock will resume its march higher.

Trader Karen Finerman agrees entirely. Although Finerman doesn’t trade technicals, she believes earnings and sales confirm her thesis that the stock has every reason to run. “Looking at the fundamentals, the stock is still cheap."

“Apple Fever continues,” adds Topeka analyst Brian White. “People around the world continue to buy their products.” White has a$1001 price target on Apple stock.

And it's not just Apple that the pros are bullish on.

“These results are probably good for the market overall,” adds trader Brian Kelly. “If Apple climbs the rest of the market will probably go with it.”

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SLIDESHOW: Top Apple Related Stocks for 2012A block of Apple may cost a pretty penny, but that doesn't mean you can't trade the trend.

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Looking at the results a little more closely, Apple said its fiscal second-quarter revenue rose 59 percent to $39.2 billion, better than the average analyst estimate of $36.8 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $11.6 billion, or $12.30 a share, from $6 billion, or $6.40 per share, a year earlier. That also outpaced Wall Street's target of $10.04 a share.



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Trader disclosure: On April 24, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Brian Kelly is long QQQ CALLS AND PUTS; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short MDY; Karen Finerman is short IWM; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long NXPI; Joe Terranova is long JPM; Joe Terranova is long JOY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Mike Murphy is long AAPL; Mike Murphy is long JPM; Mike Murphy is long INTC; Mike Murphy is long ANF; Mike Murphy is long SBUX; Mike Murphy is long FCX; Mike Murphy is long PHM; Mike Murphy is long MCD; Mike Murphy is long BRCM; Mike Murphy is long CAT

For Mike Khouw
Nothing to disclose

For Dan Berenbaum
Nothing to Disclose:
The Primary Analyst (including his/her household) does not have a financial interest in the securities of the subject company(ies), nor does MKM Partners LLC habitually deal as principal in transactions in the securities referred to herein (or other instruments related thereto), including positions and transactions contrary to any recommendations contained herein held by the research analyst/household. The Firm has not engaged in transactions with issuers identified in the report. MKM Partners LLC does not make a market in the subject company(ies). The subject company(ies) is(are) not currently, nor for the past 12 months was(were), a client(s) of the Firm. The research analyst does not serve as an officer, director or advisory board member of the company(ies) and receives no compensation from it(them).

For Karen Hotlhouse
I, Karen Holthouse, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.


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