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All Aboard! The Apple Stock Express Is Now Boarding!
What a way to start the week and end the year. Apple flies off the handle and busts through the 40 dollar mark yet again. Last year at this time Apple was bottoming out at 13 bucks a share. We’ve come a long way since then. Ah, the air up at this altitude is good. I wish I could say that we’re going to stay here but there is liable to be some short-term slippage. We’re riding the crest of an oddball rally that seems based more on speculation and hope than a hard reading of the facts. A consolidation seems in order any day now so one would be wise to wait a day or two and see if Apple sags back into the upper thirties before buying any more. Of course with MacWorld starting January 4th, there's not much hope for a cheap buying opportunity between now and then. One thing is for sure; there won’t be any tax loss selling this year like there was last year and the year before (and the year before that!). There may be some short term profit taking early next year that will slow the stock price ascent. However, expect any dips in price to be seen as an accumulation opportunity by new investors who, like flies, are starting to create a buzz around Apple's sweet bottom line. The Yosemite unveiling at MacWorld might give the stock price a larger boost than the original iMac announcement last May. Why? Everyone now knows that Apple can pull off a great, even revolutionary, product release from announcement to full production. In May, if my memory doesn’t fail me, there were many doubting Thomases that thought the iMac, a floppyless all-in-one, was going to be a flop. In fact all year, even in the face of record-breaking iMac sales, there have been those who have sold Apple short. Just last month Apple hit a 12 month high for short positions. Essentially, a short position is a bet that the stock price will drop. Apparently, there’s a lot of investors out of touch with the numbers over at Apple or the short positions wouldn’t be so voluminous. This has kept the stock price down and what we may be seeing now is a lot of short covering as this year's MacWorld approaches with only good news, strong forecasts and hot new products. Interestingly, the big shot analysts are starting to get bullish about Apple. It seems as if they're just now noticing the success of the iMac at not only creating profits but at building long term market share growth. It’s all stale news to any Apple investor, but to hear the analysts talk you’d think they were all Vasco de Gamma discovering the vast riches of India for the first time. I read today at CBS MarketWatch that some clever analyst named John Murphy is now saying that Apple looks good. Duh! "If you’re looking for a technology stock that’s just kind of a sleeper, this looks like one… if it takes out the old high of 44 it could move up towards 60." I couldn’t agree more. But, Apple, a sleeper? Where have these guys been? This party’s been going on since last January. Price Headley of Schaefer’s Investment Research said that SIR belatedly began recommending Apple when it was 37 15/16th and target Apple to move to 42. Glad I’m not paying Headley for that brilliant hot tip. We've all been impatient for these Wall Street analysts to see the obvious value that Apple stock really is and it may seem like they've missed the boat. However, from their conservative point of view they have merely delayed boarding till the ship was ready to set sail. It's the fashionable thing to do. What these big shot Wall Street technical analysis types have recently discerned in the AAPL chart is the unfolding of a classic Dow Theory scenario. Apple's stock is about to break through an important resistance zone, which has been a ceiling to Apple stock price for years. As laid out quite clearly in "Technical Analysis of Stock Trends" by Robert Edwards and John Magee (which is required reading for all investors) resistance is created by a peculiar psychological state of investors whom upon buying a stock are chagrined to watch it lose value. Often, such an unlucky buyer will wait till the stock rises back to the level at which he purchased it only to then cash out his investment thanking his lucky stars that he got all or most his money back. This is why every time Apple gets into the low forties it falls back down. Once the witless schmucks who want out at this level have all sold there will be nothing stopping Apple's ascent into the 50 or 60 dollar range. It's that simple, almost. Read the book. Apple has been on a long term descending trend with the resistance set at about 46 dollars. It doesn't matter that the stock price has been ascending for almost a year now. Until resistance is cleanly penetrated from a technical point of view, AAPL is still in a down trend. Even Wall Street now realizes that this downtrend is now about to come to an official technical end. Other analysts see the monthly resistance levels going back ten years at around 40 to 42 dollars, thus suggesting that if Apple can spend a month above 40 dollars in January an eight year long down trend will be broken for good. All this would suggest that if you've sold Apple short better run for cover. If you want to get in long better act soon, because it looks as if this ship is set to take off. Your comments are welcomed. |