Apple: What the 10-year monthly chart says

The short-term market is hard to read, but the long-term trend of this tech titan provides some insight.

By Dec 24, 2012 11:28AM
AppleBy Andrew Nyquist

I was reviewing some select tech stock charts and found myself hung up on Apple (AAPL). Yeah, I know. It's everyone's pet project. But I was having some trouble deciphering the near-term action, so I decided to zoom out . . . a lot. I ended up with a 10-year monthly chart that, in the end, I found quite refreshing. And my brain thanked me for the relief.

Here are a couple key takeaways:

1. Apple's recent undercut of the $500 mark touched and bounced off the 20-month moving average support. Over the past 10 years, this moving average has been broken once (confirming a deeper sell-off) and has been supportive twice (in 2006 and 2008). But I like the comparison to 2008 better. It held initially, producing a nice "backtest" rally, before failing and confirming the aforementioned deeper sell off. Either way, the $500 mark looks like an important toggle to watch on a closing basis.

2. The stock has room down to $425-$450 long-term uptrend support. This doesn't mean that it is magnetized to this level on an immediate basis, but the trend line is there and rising, for now or later. If a break of $500 is sustained, then anything can happen. I have a rather small long position in AAPL (initiated Monday), but will look to add closer to $500, with the idea of catching an oversold rally that could give the stock some breathing room and put some change in my pocket.

The market is still sending mixed signals, so I am keeping positions small, looking to add or cut bait as the price action dictates. Trade safe, trade disciplined.

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Tags: AAPL
Dec 24, 2012 1:02PM

Drawing straight lines on log scales doesnt make any sense to me, your looking for a pattern that doesnt exist!

Dec 24, 2012 6:30PM
Good analysis. Apple like Microsoft could be building a new base or a huge value trap. Obviously it all depends on next few quarters earnings and how the competition stacks up.  I think Apple has built a huge and loyal consumer base but the competition in mobile devices is going to get brutal in 2013 and beyond with both prices and margins coming down rather fast.
Dec 24, 2012 1:57PM
I`ll be buying on a dip.Perhaps if it dips just below $500.
Dec 24, 2012 2:11PM
hedge funds facing redemptions caused the stock to slide. it's an open issue whether this will continue. Looking @ hedge fund returns for 2012 i'd be investing with someone else. Bet this continues and stock continues to move lower i '13
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