Wednesday, January 9, 2013

Apple Charting:



On December 31, 2012 I was quoted by stockchase.com for uttering the following opinion on Apple on BNN’s Market Call, “Apple has not violated a long term trend line.  It could go down to $490 and not violate it.  The selloff is over.  It could still run up, technically.”

The following blog conversation took place and I quote.

On December 31, 2012   dh12 said: I disagree with your call on apple to go higher. Vied on a monthly chart it is up already 700 percent in a few years and already far extended from it's long term moving averages. What happens now usually is a strong snap back to correct this overbought condition. To go long here on apple is just poor analysis.

On January 6, 2013 Getting Technical said: Hi DH12, On Apple – when plotted on a semi log scale AAPL found support at a 10 year primary trend ($500) line and so has not violated the 2002 – 2012 advance – I have no idea what you are using as a long term moving average – my analysis is based on a very long term 15-y monthly chart.

On January 8, 2013 dh12 said: I am not using a semi log chart. IMO it's not needed in this case. Apple may get an earnings bump this month but it will be all weakness going forward. I am also looking at the long term monthy chart which in 2012 went parabolic. It is very far from it's 200 month Moving average and will correct sharply. And remember this about technology stocks in general. If Apple can go from not even being in the market to the best phone on the market in two years, the barrier to entry is pretty low, i.e., there is very little first mover advantage in this market judged by how fast the technology is reinventing itself. In other words, today`s leader can be tomorrow`s also ran faster than Moore`s law can bat an eye. Invest here in apple at your own risk

I do appreciate the input from dh12 and because Apple is such a high profile stock we need to do more work here and also invite all opinions as to the price direction of Apple.

Now: just to state Getting Technical’s (GT) position on the analysis of Apple

Firstly the opinion of GT is based on technical analysis only and so the merits of the iPhone and iPad and iWhatever is not relevant and while dh12 appears to not be a fan of Apple products GT is also not an Apple fan having no ownership of any Apple Products. Also I never said Apple was a good investment – I just said the selloff was over.

Secondly we need to question dh12 as to the claims that a semi log chart is not needed and also the claim that Apple went parabolic and it is “very far from it's 200 month Moving average.”

Our first chart is Apple monthly spanning 16 years with a linear scale. I did not use dh12’s 200-month average because such a long term average eliminates the study of any stock listed after 1995. As you can see this scale distorts reality because it makes the recent 2008-2012 advance look huge relative to the puny looking 2003-2007 advance. Note also the primary trend line joining the important 2003 and 2009 lows which when applied on this scale is non-functional.

Our second chart is Apple monthly spanning 16 years with a semi-log scale and as you can see in reality the 2003-2007 ($5 to $200) advance is greater (n per cent) than dh12’s so-called parabolic advance of 2009 through 2012 ($100 to $700). Note also the primary trend line joining the important 2003 and 2009 lows also joins the recent 2012 lows and so I state again “Apple has not violated a long term trend line.  It could go down to $490 and not violate it.” As usual all comments are welcome

AAPL Linear Scale


 AAPL Semi-log scale





















7 comments:

Anonymous said...

Good rationale, I`m not Apple fan but you can`t argue with the "flashy" product and its following.

Also, I disagree with the comment that "the barrier to entry is pretty low" only companies with the content can compete that`s pretty expensive and hard to establish.

I`m waiting to establish my position tomorrow around 510 and wait.

I bet against aapl twice last year and missed out on good returns.

Shawn Severin said...

Great points here Bill. I personally think AAPL has one last leg up. There are way too many Apple bears out there saying exactly what this blogger is saying. "What everyone knows is not worth knowing."

Rojer Fredrick said...

However, a closer look at the charts reveals that the sharp drop in Apple supplier shares didn't start on Friday, but several days before.
iPad Repair Dallas

dh12 said...

The semi log chart may flatten the curve but it can't explain a > 700% gain in less than 3 years on this stock. It will be corrected and when it does it will be severe.

dh12 said...
This comment has been removed by the author.
dh12 said...

Not even a semi log chart can stop apple falling now. Never buy a stock that is so far removed from long term monthly averages. Doesn't matter how euphoric the investment sheep are on the stock

PofN-I said...

Oops got this one massively wrong. AAPL was not technically able to still go up. I hope those that stayed long aren't suffering too much.