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5 Massively Important Observations on Apple


And a worthy thought on Research In Motion.


Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

There's been a lot of focus on Apple (NASDAQ:AAPL) of late; with the stock down 28% since the all-time high in September, investors, traders, speculators and commentators are watching it on a number of levels.

Smatterings of observations include:
  1. On a short-term chart, $500 represents the right shoulder of the (potentially negative) head & shoulders pattern we've been flagging for a few weeks (click here to view). Should Newton prevail and gravity take hold, this pattern "works" through a pure technical vacuum to in and around $400ish.
  2. On a long-term chart, $500ish represents an uptrend line that's been in place for four years.

    I bring this to your attention for two reasons; the level, naturally, is defined, and in the absence of clarity, price points assume added importance for those who look to justify equity movement.

    I will note that even at $500-28% lower than where the stock was a few short months ago-the stock remains 550% higher than it was four years ago.

  3. Minyan MB notes that the daily DeMark pattern is triggering a buy signal in Apple. I know Tom DeMark and have tremendous respect for his work, so I would be remiss if I didn't share this fare in the interest of seeing both sides.
  4. Finally, and while this is not specific to Apple, although it may well have something to do with the decline, Research In Motion (NASDAQ:RIMM) is getting set to unveil its snazzy new BB10 operating system, as previewed in the 'Ville a few months ago.
RIM reports on Thursday, and should the stock gets smacked -- which wouldn't be a shocker given the 130% rally since September (which was when Apple topped, by the way) -- I would be a buyer (at the right price) into the January 30 launch of the new operating system, and perhaps beyond. (For more information on RIMM, also see: RIMM: Will Thursday's Earnings Prompt a Short Squeeze?)

Check that chart here; if you believe there are no such things as coincidences, a picture speaks 1,000 words.

  1. So, what does this mean for the stock market? A lot, unless we've witnessed a sudden divorce between Apple and the Nasdaq (INDEXNASDAQ:NDX), which would be a massive departure from when Apple was The Most Important Stock in the World.
I've updated the Apple vs. NDX chart below as a graphical representation.

Sir Isaac Newton didn't earn his reputation as one of the smartest folks in the history of mankind as a function of his handsome looks and chiseled abs. Keep this stock on your radar as it probes $500, and remember that the animal spirits are alive and well as we trickle toward year-end.

Good luck today.


Twitter: @todd_harrison

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