Many traders who had never heard of Tom DeMark or his indicators (see Interpreting DeMark Indicators
) before he went on TV to call a bottom on Apple
(NASDAQ:AAPL) have summarily dismissed and ridiculed his work because the daily Combo 13 Buy failed. Few if any of these folks have any clue that the Combo 13 Buy came with a “Risk Level” (i.e. stop level) of $465.01 or $20 below where the stock traded when DeMark argued in favor of buying it (daily chart below).
And of those few, probably a miniscule percentage would care to acknowledge that the monthly DeMark counts – simultaneous Combo Sell 13 and TDST Sell Setup – hinted at closing long standing longs on August 31 of last year with the stock at $665.24 (see below).
I’m pointing this out not to defend DeMark’s studies – they need no defense, especially from me – but to highlight the next two areas of potential selling exhaustion. Those areas are at $405, the daily TD PropExhaustion Down target, and $377, the monthly TDST Level Down price. Note also that on the weekly chart there’s nothing to suggest an end to near term weakness.
More hocus-pocus, you say? Maybe. But the fundamentals are not arguing for higher prices either, with 2013 adjusted EPS estimates now right at the 2012 number, despite a 15% growth in revenues. Way back when, I argued
AAPL’s Achilles' heel was the inevitability of margins compressing back to the mean. In my humble opinion that process has not ended yet. Over the following several months, I have also discussed on Buzz & Banter
(subscription required) certain price ranges I had in mind for AAPL that are proving to have been way too optimistic; so, prescient I have not been in that regard. But that, in a nutshell, is the AAPL stock story: When will it find enough buyers focused on cash flows and the balance sheet to stand up to those sellers whose vision of never-ending runaway growth has been shattered? I thought that inflection point would have arrived by now, but obviously the euphoria of the mo-mo days was far more widespread than I thought. Or as uber-technician John Roque is fond of saying, when stocks break, they don’t revert to the mean, they revert beyond
Position in AAPL.
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