As noted in a previous post, I am bearish on Apple Computer (AAPL) for the next several months. Upon further review I am bearish in a much longer time frame also.
The run in AAPL started in 2003 along with the bull market. This time range shows that only a 1/8 retrace will occur in July. This is much too short a time period to work off a bull move of that many points over than long of a time frame.
As discussed in my previous post, the range following the correction into July 2006 and continuing until December 2007 has a 50/50 point in September of this year. Ignoring the longer term chart above, a case can be made for a blow off move up to break to a new high at a 50% time retrace. But because of the long term bull run already on the previous chart, I cannot see a favorable risk/reward to any long position from the current level.
In the short term I see two possibilities for future price movement.
- Price could follow the same slope as the fast drop from Dec07 to Feb08.
- Price could follow the slope of the recent move up.
Option 1 would put a low in sometime in August. I believe this is the more bearish of the two possibilities.
Option 2 would put a low in sometime in October. The symmetry of this move would be more bullish for a breakout from the double bottom (or “W”) pattern.
Due to the long run from 2003 I cannot see a breakout from the double bottom going much higher than the 2007 high (if it can run that far).
As always, I can be completely wrong.
Post Modified: July 3rd, 2008 at 12:32 am
Tags: AAPL · Square of Range7 Comments
7 responses so far ↓
Andy,
i appreciate your comments on apple. I think, however, that in this case you may be mistaken. Apple is collecting a lot of money, and is growing pretty much all over the place. the iphone, the mac, almost everything seems to be poised to make apple a great investment over the next couple of years. I do think that you are right though about the short term drop, I would expect a run-up into july (earnings) or maybe before iphone release, then a sell-off, which may be sharp…but I would not bet against apple outperforming in the last quarter of the year once again.
I was thinking of betting big on apple for the last 2 quarters, I guess I should pare that down a bit
I guess you also should look at apple in context. Back in 2000, the company was being left for dead, and they had not released the ipod and had some blunders… Almost every thing that they have released in the last couple of years has been a hit, sooner or later. I think that opening the iphone to more countries will have a good effect on the stock, granted, no-one knows how far it could run (some people in teh group think 400 by Jan 10 is possible), and I honestly believe that if apple continues to execute the way they are they could easily hit that…
Kurt - you may be right. I’m the wrong guy to ask about Apple fundies because I have always preferred the PC/Microsoft world. LOL!
As for the market, I never debate market moves because we can just wait and see what actually happens.
Andy - First of all, mucho gracias for taking time out of your busy life and putting down a full blown analysis of apple.
I believe a lot in charts but when charts contradicts my fundie belief then i don’t stay in the trade.
I think AAPL is a really good example to see who wins between fundies and techies. AAPL has amazingly strong fundamentals and with them in the background i like how you are sticking your neck out on this one. Andy, if AAPL goes down in the way you are saying to the prices you are saying, then it will also be an extremely good example to put in your latest news price article you put out today.
Kurt - I have notice some strange behavior in AAPL lately. Even with such great fundamentals that every one sees on a daily basis, AAPL goes up with a low volume. On down days, it goes down a lot and with high volume…
As far as what my guess is, if the general market trend stays up, AAPL can break all previous high in no time..But AAPL should see 150 before it sees 250.
Tk, no question that apple is due for a correction. I think however that the short term drop last week from 192-171 was the one to wash out some of the froth. I originally thought that we could get over 200 on this run, I don’t think so right now (so I sold my june calls).
I do think that apple will get to somewhere between 130-150 later this summer, but I’d be careful to bet against apple for the last two quarters, unless the consumer really just stays away…
I am hoping to see 150 on apple before seeing 250, if things go as hoped, then I could cover my shorts and increase my long positions…
The TA view may be appropriate for positions being timed between 1 and 12 weeks, but I believe Apple is a uniquely dominant tech CE, mobile, and OS stock.
For example, given Apple’s fundamental and smothering technical and marketing advantages, Apple could be trading above 500 by Jan 2010. 300 seems like a 3 foot putt if Jobs and the market stay fairly healthy.
[...] Apple Computer (AAPL) post is an update to a post made earlier this month. I have updated the charts but there is no material change from my previous [...]