Chart Call: Apple’s Exit (AAPL)

We have had a hard time not noticing how many more emails Apple Inc. (NASDAQ: AAPL) has sent out on deals compared to last year.  More importantly, we have noticed how consumer electronics and gadgets are on about as best of a sample for holiday shopping as you could imagine.  What we wanted to look at is some weekly and monthly charts to see what is happening to Apple.

An affiliate of ours, Adam Hewison at INO, issued a audio/video presentation on Apple this morning.  Considering how much buzz is in the stock and how much it has grown from a niche play to a mainstream fashion statement.  Interestingly enough, the old Long-Call that has been in place from early this year is being exited.

What we would note is that this is far from a SHORT SELL call, despite the notion that if you should sell a long position then it should be a short sell candidate.  For more conservative or less aggressive traders and investors, exiting a long doesn’t mean short sell the hell out of it.  what is noticeable is a clear double top and potential roll-over being seen.  But we saw the same sort of pattern happening in June and part of July, with the difference being that the stock ran another 50% up from that point before recent weakness.

Uptrends cannot last endlessly, particularly as the law of big numbers comes into play.  Despite a near-10% pullback from highs, Apple’s market cap is now $173 billion.  That leaves Apple as the #6 stock on our Real-Time 500 Index of US companies by market cap.  If you can believe it… Apple is still worth more than General Electric Co. (NYSE: GE) according to that list compiled for us by Interactive Data.  Still, Apple has actually not put in any classic sell signals for ‘point of no return’ bulls.  If we see a few more days of this choppy trading, Apple will at least be formally confirmed as having moved out of the long uptrend that has in place for more than 8 months.

We are starting to see more and more put option trading in Apple as well, although still less than call options activity.  That is indicative of traders and investors still generally wanting to keep a long-side of the market trade on compared to the retail investing public deciding to start betting against one of their favorite companies.

We are always more cautious on using charts on individual stocks than we are in sectors or in broader markets, but Adam Hewison is the one who was constantly calling for $1,200.00 gold and higher back when gold was around $950.00.  Again, that audio/video chart analysis by Adam can be seen here.

Jon C. Ogg