Wednesday, March 21, 2012

Apple’s Secular Advance

Much has been said about the recent advance in the shares of Apple Inc. with the big focus on the February to March non-stop run from $400 to $600. Now with Apple paying a dividend there are views on a transition of Apple from a growth company into a value cash cow that will spin of cash to the shareholders, A few days ago on business TV a technical analyst referred to the recent advance to be “parabolic” and warned of a probable nasty correction – see chart below.

The technical analyst made a common error – typical in the industry in that he is using the incorrect scale. The rule is if the price data in the window doubles – use a semi log scale. Linear scales are OK for TV and newspapers but not OK for proper trend analysis.Our second Apple chart below clearly displays Apple in a defined secular advance within the center of a long term growth channel. The so-called parabolic run has vanished. 

1 comment: said...

Hello Anonymous

Yes the gold secular bull market has run 12 years or three cycles. There should be at least two more but the price magnitude will diminish. In other words the lower fruit has been picked. The Kitchen cycle count suggests the technology sector is now where the gold complex was in 2001 and yes there is an inverse relationship

Hello PofN-I

Brookfield infrastructure partners BIP.UN manages timber but that is just a small portion of the business – however the trend is up and there is a nice fat yield

Hello Shawn

Yes the TSX Composite has lagged most global markets though 2012 because of the heavy commodity exposure. But as the current bull matures the lagging “risk on” sectors will follow the leaders (financial and technology). The TSX Comp will be much higher over the next 6 to 12 months.