Forgotten Profits Trade Setup Archive
Below you'll find Ian's setups stacked up and ordered chronologically. As this service once resided at another home, the alerts only go back to mid July. For a full track record, see the portfolio.Apple Earnings Disappointment Sends Stock Lower Despite Revenue Beat
Apple Earnings Disappointment Sends Stock Lower Despite Revenue Beat
Apple earnings disappointment was the headline takeaway after the tech giant released its fiscal Q2 results yesterday. Despite beating Wall Street’s top-line expectations, shares of Apple (AAPL) dropped in after-hours and continued lower during Friday’s session. The culprit? Weak iPhone sales and soft guidance that fell short of investor hopes.
Apple Beats on Revenue, But Misses Where It Matters
According to CNBC’s earnings report, Apple reported revenue of $90.8 billion, slightly ahead of consensus estimates. However, the company reported a 10% year-over-year decline in iPhone sales, which make up over half of its total revenue. Services revenue grew by 14%, which was a bright spot, but it wasn’t enough to offset concerns over hardware performance.
The disappointment in Apple’s earnings is largely tied to this contraction in hardware growth, particularly as competitors in China continue to chip away at the iPhone market share. While CEO Tim Cook cited strong performance in emerging markets and expressed confidence in the upcoming product pipeline, investors were clearly hoping for more robust signs of a turnaround.
Forward Guidance Raises Red Flags
Another factor contributing to Apple’s earnings disappointment was the company’s forward guidance. Apple provided vague commentary about the current quarter, suggesting only a “slight improvement” in year-over-year revenue. That lukewarm outlook signaled to traders that the near-term upside might be limited, particularly with macroeconomic headwinds like inflation and shifting consumer behavior still in play.
Morgan Stanley and Goldman Sachs Analysts trimmed their price targets in response to the guidance, adding more downward pressure on the stock. Despite Apple’s largest-ever $110 billion share buyback authorization, the market viewed this as a defensive move rather than a catalyst for renewed growth.
How Traders Are Responding
In the TraderInsight War Room, immediate downside setups emerged right at the open. Apple traded below the VWAP and continued to reject intraday resistance zones. Several traders used volatility band reversals and opening gap reversion strategies to short the stock successfully within the first hour of the session.
Yesterday’s live stream webinar also touched on using confidence intervals to fade post-earnings overreactions—a tactic that played out perfectly in AAPL. The Apple earnings disappointment was a textbook example of sentiment-driven price action decoupling from fundamentals.
What to Watch Going Forward
In the future, traders will watch for signs of stabilization around the $170 level, a key technical support since March. If that level fails, the next support sits near $165, which aligns with a 2SD deviation from the mean on the daily chart.
Longer-term investors may need a meaningful uptick in hardware sales or new product announcements—potentially in the AI or AR/VR—to reignite bullish momentum. Until then, expect continued volatility and headline-driven movement.
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The Apple earnings disappointment reminds us that even the biggest names in tech aren’t immune to market skepticism. For active traders, that spells opportunity—especially when paired with a plan like the ones we teach at TraderInsight.
May 2, 2025
May 1, 2025
Understanding the 2025 GDP Contraction and Its Market Impact
Understanding the 2025 GDP Contraction and Its Market Impact
What Is GDP?
Gross Domestic Product (GDP) is a comprehensive measure of a country’s overall economic activity. It represents the total monetary value of all goods and services produced within a nation’s borders over a specific period, typically quarterly or annually. GDP serves as a critical indicator for policymakers, investors, and economists to assess an economy’s health and trajectory.
There are three primary approaches to calculating GDP:
- Production (or Output) Approach: Summing the value added at each production stage across all industries.
- Income Approach: Aggregating all incomes earned by individuals and businesses, including wages, profits, and taxes minus subsidies.
- Expenditure Approach: Adding up all expenditures made on final goods and services, including consumption, investment, government spending, and net exports (exports minus imports).
The expenditure approach is the most commonly used method and is calculated as:
GDP = C + I + G + (X – M)
Where:
C = Consumer spending
I = Investment by businesses
G = Government spending
X = Exports
M = Imports
A positive GDP growth rate indicates economic expansion, while a negative rate suggests contraction. Monitoring GDP trends helps stakeholders make informed decisions regarding fiscal policies, investments, and resource allocation.
Why Was GDP Low as Reported Today?
On April 30, 2025, the U.S. Department of Commerce reported that the nation’s GDP contracted by 0.3% in the first quarter, marking the first decline since early 2022. This downturn has raised concerns about the underlying factors contributing to the economic slowdown.
Surge in Imports Ahead of Tariffs
A significant driver of the GDP contraction was a 41.3% surge in imports, as businesses accelerated purchases to stockpile goods before implementing new tariffs under President Donald Trump’s administration. Since imports are subtracted in the GDP calculation, this surge negatively impacted the overall figure.
(Source)
Implementation of “Liberation Day” Tariffs
On April 2, 2025, President Trump announced sweeping tariffs on nearly all imported goods, a move he termed “Liberation Day.” These tariffs aimed to promote domestic manufacturing but led to increased costs for businesses and consumers, disrupting supply chains and economic stability.
(Source)
Decline in Government Spending and Consumer Confidence
Government expenditures decreased during the quarter, and consumer confidence reached its lowest level since 2020. Major corporations, including GM and Delta, withdrew financial guidance due to economic unpredictability, further dampening economic activity.
(Source)
Inflationary Pressures
The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose by 3.6%, exceeding the central bank’s 2% target. This uptick in inflation complicates monetary policy decisions and may hinder efforts to stimulate growth.
(Source)
How This Affected the Price Action in the Markets Today
The unexpected GDP contraction had immediate repercussions in financial markets. Major indices experienced significant declines as investors reacted to the economic data.
Stock Market Declines
- Dow Jones Industrial Average (DIA): Fell by over 700 points during the trading session.
- S&P 500 (SPY) and Nasdaq Composite (QQQ): Both dropped, with the Nasdaq losing more than 2%.
(Source)
Investor Sentiment and Volatility
The combination of declining GDP, rising inflation, and trade uncertainties led to increased market volatility. Investors sought safer assets, causing fluctuations in bond yields and commodity prices. The heightened uncertainty may lead to reduced capital expenditures and hiring in the coming months.
Currency and Commodity Markets
The U.S. dollar weakened against major currencies as confidence in the U.S. economy waned. Commodity prices, including oil and metals, also declined due to fears of reduced global demand stemming from the U.S. economic slowdown.
Conclusion
The recent GDP contraction underscores the fragility of the U.S. economy amid policy shifts and global uncertainties. While some underlying economic indicators remain resilient, the interplay of trade policies, inflation, and consumer sentiment presents challenges for sustained growth. Market participants will closely monitor upcoming economic data and policy decisions to gauge the trajectory of the economy in the coming quarters.
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April 30, 2025
