Its a fact that money from one investment can flow easily to fuel another. People / firms that invest / trade in AAPL also have similar interest in Goog , FB , TSLA , and MSFT , just to name a few. Looking at price ratio can tell us direction of , and help us understand where we are headed to.
Here I charted the price ratio of AAPL / GOOG .
From an area of relative flatness (Stage 1), where AAPL was trading around $300 (11/1/2010 - 12/1/2011) and Goog trading between $500-$600, I derived a equilibrium ratio of 0.64. Anything significantly above it would suggest into AAPL , and vice versa when significantly below it.
The success of iPhone and iPad bought significant flow into AAPL (Stage 2), but not quit at the expenses of Goog . The In Stage 4, we see sell of AAPL , and money seems to flow into Goog . The AAPL/Goog ratio bottoms out to 0.4.
Currently, I believe that we are back in Stage 1. The ratio is now 0.58. We are heading back to equilibrium ratio (0.64). I expect that AAPL will continue to go up, and at some point, Goog will start coming down, moving us to Stage 2.
Let's keep watching.