« Best Stock Pick - MDR, McDermott - Wait For A Breakout Or Buy Now? | Home | How To Use Stock Market Timing, Trend Analysis And Best Stock Picks To Fix A Broken Portfolio »
AAPL - Apple - Stock Chart Analysis, Time To Jump Onto A Fresh Horse From Our Best Stock Picks?
By Geoff Green | April 23, 2008
Using stock trend analysis and market timing techniques, AAPL is a best stock pick whose stock price might be becoming a little disconnected from it’s fundamentals.
AAPL is definitely a company whose stock price has been in an uptrend, even with some periods of price corrections and base building, it’s still a stock that has produced some great investment returns.
AAPL is a top performer in its industry, here is an overview of the company:
Apple Inc, (AAPL) Apple Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of personal computers and related software, services, peripherals, and networking solutions worldwide. It also provides a line of portable digital music players, as well as related accessories and services, including online sale of third-party audio and video products. The company’s products and services comprise the Macintosh line of desktop and portable computers; the Mac OS X operating system; the iPod line of portable digital music players; the iTunes Store, a portfolio of peripherals that support and enhance the Macintosh and iPod product lines; a portfolio of consumer and professional software applications; and the Xserve and Xserve RAID server and storage products. In addition, Apple Inc. offers various third-party Macintosh and iPod compatible products, such as application software, printers, storage devices, speakers, headphones, and other accessories and supplies. The company provides an online service to distribute third-party music, audio books, music videos, short films, television shows, movies, and iPod games. Further, it offers products and services for the educational industry, which include iMac and the MacBook, video creation and editing solutions, wireless networking, professional development solutions, and one-to-one learning solutions. Apple Inc. sells its products to education, consumer, creative professional, business, and government customers through its online stores and retail stores, as well as through its direct sales force, third-party wholesalers, resellers, and value-added resellers. As of March 9, 2007, the company had 173 retail stores in the United States, Canada, Japan, and the United Kingdom. Apple Inc. was founded in 1976. It was formerly known as Apple Computer, Inc. and changed its name to Apple Inc. in January 2007. The company is headquartered in Cupertino, California.
AAPLs growth pattern, although it stays pretty much in an expansion mode, has varied from 44% a year in April of 2005, down to 22% in April of 2007, and back to 29% in April of 2008. Although that type of growth rate is enviable it’s the inconsistency of the growth rate that can cause heartburn for some investors.
AAPL yearly earnings per share has been much more consistent than its growth rate.
From $1.33 in 2005 to $5.89 in 2008 you can almost put a ruler against the EPS graph - with the exception of early 2008 when it’s EPS was $6.42 - so today the EPS has fallen back a little bit.
Given that the recent earnings announcement has not boosted the stock price appreciably, investors have to wonder if it’s prudent to hold AAPL during this trend correction or current base building time period.
Let’s take a look at the chart for more clarity:
From the low point set in July of 2007, the price trend for AAPL has definitely been up and would have been a best stock pick for many portfolios. I have drawn in a lower price trend line from mid 2007 to January of 2008.
In January of 2008 AAPL stock price decisively broke below the upward trend - and much worse - made that move on twice the average trading volume for the stock.
Three weeks of heavy selling during an overall stock market down trend brought the price of AAPL down to the support area of $115 which was a low set in August of 2007.
So what should an investor think about buying or holding AAPL today?
A couple of items jump right off the stock chart that are positive for the price of AAPL. First the stochastics and the MACD indicators are showing strength on the weekly chart.
The downside is that AAPL’s stock price is not increasing on expanding volume. This clear lack of trading volume puts any price move under a cloud of suspicion.
Also, the prior upwards price trend that was broken in January now becomes an area of overheard resistance.
As AAPL price crosses $160 and approaches $180 I would be very cautious and watchful for a renewed bought of selling that could bring the price of AAPL down to the $120 level.
Further, any price reductions that is accompanied by increasing trading volume would be a warning that the price of AAPL will drop further.
On the other hand, if AAPL can trade and close above the old high of $200 on increasing volume it would suggest that the uptrend has been renewed. I think at this point that is unlikely to happen in the short term.
At this level I would be tightening up my stops and looking for better horses to ride.
I’m not in love with AAPL so I’d be looking to trade horses at this point.
Take a look at our weekly best stock picks where you’ll see over 20 top ranked stocks that are in confirmed up-trends.
What do you think?
As the author and owner of this article, you have my permission to publish these postings & articles electronically or on your own Web site, free of charge as long as the following by-line and functional Internet link is included in its entirety.
Written by Geoff Green, at http://profitable-investing.com Copyright 2008.
Topics: MACD, Selected Stocks, Stock Analysis, lessons, stochastics, stock analysis lessons |
Comments
You must be logged in to post a comment.
