Dear HX Society Member, we had some technical difficulties this morning and as result we are resending HX Income with the corrected trade instructions at the bottom of the note.

For the last few weeks, we have been writing about the ongoing correction that has been happening in the stock market.

Unlike most investors, here at HX Research we get EXCITED about corrections!

The longer they go on – and if the primary trend in the BULL market is maintained – the more opportunities we see.

The length of this current correction has resulted in some of the best companies of all time trading to interesting levels.

Today’s HX Income idea is one of those.

It is perhaps the most successful company – and stock – of all time. Now, it is trading at a level that presents a great income opportunity.

Here is the idea…

The company is Apple Inc. (NASDAQ: AAPL). Yes, that Apple…

We don’t need to tell you anything about the company. We are sure you are familiar with it.

It is one of the largest companies in the world by market capitalization and does more net income in one year than all 2000 companies in the Russell 20000 over the same period.

Let’s start with the stock. Here is the chart of the stock price over the last decade…

At its recent high of almost $260 at the end of last year, the stock was up fourteen-fold over this period. This compares to the S&P 500, which tripled over the same period.

The stock has gone higher on the back of strong growth in earnings. This table shows those results measured by their earnings per share or "EPS" over the last ten years…

The company has tripled EPS over the period and has grown almost every year. The growth has been strong and consistent. This is particularly impressive for a company the size of AAPL.

The strength of their business has also enabled them to consistently beat analysts’ estimates for earnings when they report results.

Here is the table showing their reported results versus the analysts’ predictions…

Over the last five years, they have beaten every quarter except for a few occasions. Going back over the last decade, they have only missed three times.

This is another reason that it has been such an outstanding stock.

Consistently beating numbers like this means that the analysts who follow the stock have to keep taking their numbers higher.

When analysts take their earnings numbers higher (“positive earnings revisions”), the stock almost always follows.

Here is a chart from the last couple of years showing the stock price along with the analysts’ estimates for 2025 EPS…

The numbers have mostly been stable but are higher than the analysts thought they would be in the Spring of 2024. This is why the stock performed so strongly in the 2^nd half of the year.

Recently, though, the stock has pulled back hard. Since hitting a new all-time high on December 26, 2024, the stock has pulled back -15% in just a few weeks.

Below are charts showing the stock price over the last few years along with the relative strength index or “RSI.” Remember, the RSI is our key tactical trading technical analysis indicator, which we often use at HX Research.

Since hitting that high, the stock has traded down almost every day.

Trading down quickly and consistently has driven the RSI to levels AAPL stock seldom hits. Earlier this week, the RSI traded below 30.

This is the level where we begin to get interested. It indicates that some degree of investor “panic” has set in with the sell-off.

Why is AAPL stock down so much?

If you listen to the financial media and the "smart" money, they will talk about AAPL's Chinese market share, concerns about valuation, and whether their AI products will live up to expectations.

These are all valid points, but they were also valid (and known) three weeks ago when the stock was hitting a new all-time high.

We think the stock is down because it was deeply overbought. At year-end, big institutional investors rushed into the stock to protect their relative performance.

At a 7% weighting in the S&P 500, every +/- 15% move in AAPL stock is 1% performance in that index. Missing it (or getting caught with too much) can create performance issues for institutional money managers who are indexed to the S&P 500.

This is also why we think the stock is now THIS oversold.

We looked back at previous times when the stock had traded at these levels of RSI. Here is a table showing how the stock traded in the weeks and months after hitting these levels…

In the short term (30 days or less), the stock does ok, but looking out over several months, the returns are strong. Double digits and up almost 80% of the time.

This is the ten-year data, but looking at the last five years, it has been up 100% of the time.

This makes sense for one of the greatest companies of all time.

Remember that when we sell puts for income, we don’t need the stock to go up a lot. In fact, we don’t need it to go up at all!

We simply need it to stop going down.

We think the time is right for AAPL stock to generate income for our readers. We are going to take a bite out of this idea and recommend selling some puts on the stock!