Look at AAPL's 31% correction and why it won't go over 122
Apple's highest close was back on February 23rd of this year when it finished the day at $133. Since that time it has only gone over 133 on 3 occasions and has reached as high as 134.54 on April 28th.
I wanted to point out that all remarkable investments have major declines and are a lot more volatile than Wall Street likes to point out. The stock market has had only a 12.3% correction so far this year as measured by the S&P500 from its highest close to its lowest close (intraday that correction was more than 14.7%). Meanwhile, AAPL fell 22.5% (highest close to lowest close) and fell 31.5% from high to low. Both stats are double the S&P500.
It is quite remarkable that a company like AAPL with so many buy recommendations and happy customers who love and upgrade their phones and with so much cash on the balance sheet and low P/E multiples can be so volatile. AAPL is twice as volatile as the market using this simple approach and you should expect this kind of volatility to continue because that's how it has always been. It is wise to look at the facts and then make rational expectations as to what you will see in your investment returns.
Volatility is the least important factor for deciding what investment to buy and hold because volatility is a function of investors reaction to news. Volatility is also a function of the company's ability to keep shareholders and the general public up to date on what is going on at the company, but it says very little about the company itself. If you avoid holding or buying stocks because they are volatile, then you might be missing out on compounding your wealth over the long haul.
I am showing here how AAPL used to have buyers at the 120-122 level from back in February until August. When there are a lot of buyers at a certain price level, this is represented by the fact that almost no volume trades at that level. You can see this clearly in the chart of volume on the right. It is a histogram of volume displayed across the daily range of trading each day and summarized. The important points to look at are where there is almost no volume and where there is high volume. The low volume levels are more important because they represent "HIDDEN" resistance or support.
The tracks of major institutional buyers and sellers are shown simply by the areas on the chart where almost no stock trades. With this point in mind, AAPL will have a very difficult time getting over the 120-122 level where buyers used to be and we can and should surmise that they are now sellers at this level. If 122 is breached and sustained, then we could conclude that the buyers are back and then assume that the fundamentals have caught back up and are justifying valuations.
What is my point? Know what to expect and plan for volatility and know what the stock chart is telling you. The stock chart clearly shows you important levels by the nature of what happens and what doesn't happen (trades don't happen at "one-side" levels in the market). Use these levels as trade entry points and you can keep your risk to a minimum and take advantage of the volatility. Stocks are just voting machines in the short term, run by the hopes and fears of varying investors and traders knowledge and has almost nothing to do with what is going on at the company.
Let's all work together here at TradingView to find KEY LEVELS to buy and sell to keep our risk as low as possible.
Tim
AAPL 119.50 last - Nov 1, 2015 Target 116, then 111, then 104 where I want to get long. Short entry levels: 120.5 - 121 - 121.30 stop 124, 125, 126.
I wanted to point out that all remarkable investments have major declines and are a lot more volatile than Wall Street likes to point out. The stock market has had only a 12.3% correction so far this year as measured by the S&P500 from its highest close to its lowest close (intraday that correction was more than 14.7%). Meanwhile, AAPL fell 22.5% (highest close to lowest close) and fell 31.5% from high to low. Both stats are double the S&P500.
It is quite remarkable that a company like AAPL with so many buy recommendations and happy customers who love and upgrade their phones and with so much cash on the balance sheet and low P/E multiples can be so volatile. AAPL is twice as volatile as the market using this simple approach and you should expect this kind of volatility to continue because that's how it has always been. It is wise to look at the facts and then make rational expectations as to what you will see in your investment returns.
Volatility is the least important factor for deciding what investment to buy and hold because volatility is a function of investors reaction to news. Volatility is also a function of the company's ability to keep shareholders and the general public up to date on what is going on at the company, but it says very little about the company itself. If you avoid holding or buying stocks because they are volatile, then you might be missing out on compounding your wealth over the long haul.
I am showing here how AAPL used to have buyers at the 120-122 level from back in February until August. When there are a lot of buyers at a certain price level, this is represented by the fact that almost no volume trades at that level. You can see this clearly in the chart of volume on the right. It is a histogram of volume displayed across the daily range of trading each day and summarized. The important points to look at are where there is almost no volume and where there is high volume. The low volume levels are more important because they represent "HIDDEN" resistance or support.
The tracks of major institutional buyers and sellers are shown simply by the areas on the chart where almost no stock trades. With this point in mind, AAPL will have a very difficult time getting over the 120-122 level where buyers used to be and we can and should surmise that they are now sellers at this level. If 122 is breached and sustained, then we could conclude that the buyers are back and then assume that the fundamentals have caught back up and are justifying valuations.
What is my point? Know what to expect and plan for volatility and know what the stock chart is telling you. The stock chart clearly shows you important levels by the nature of what happens and what doesn't happen (trades don't happen at "one-side" levels in the market). Use these levels as trade entry points and you can keep your risk to a minimum and take advantage of the volatility. Stocks are just voting machines in the short term, run by the hopes and fears of varying investors and traders knowledge and has almost nothing to do with what is going on at the company.
Let's all work together here at TradingView to find KEY LEVELS to buy and sell to keep our risk as low as possible.
Tim
AAPL 119.50 last - Nov 1, 2015 Target 116, then 111, then 104 where I want to get long. Short entry levels: 120.5 - 121 - 121.30 stop 124, 125, 126.
Comment:
Not stopped out at 124 - AAPL is not reacting to 122 and is holding above 122. If the price can't begin to move down on Monday or Tuesday next week, I will pull my "short-side" trading recommendation at this time as we move into the holiday selling season.
Comment:
Excellent GAP DOWN this week on Credit Suisse's downgrade of AAPL due to inventory buildup and order slowing. I have to surmise that this is the typical pre-holiday inventory build and partly a lack of growth in iPhone6 sales. Either way, AAPL pulled back down to the last KEY EARNINGS LEVEL at 116.5 and we are seeing support come in at that level. If you are short and anxious to book profits, this is the place to do that. We can see how the stock lifts from this important support level to gauge how well the stock is being supported. Apple's new iPad Pro accepts orders online today (Wed 11/11) and tomorrow they could announce a strong order flow and could lift the shares. Either way, the drop from 122 to nearly 115 is a success so far.
Comment:
AAPL dropping on forecasts for iPhone sales to drop year-over-year, a major shift in market expectations. Reductions in price targets and sales are coming from major brokerage firms. $110 reached. $108 was a key support level in the last selloff.
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