AAPL's 45 month Uptrend of Higher Highs and Higher Lows ended today. I didn't think this would happen, but it did - for whatever reasons. The May 18th Intraday Low of 517.58 and Closing Low of 525.71 were both decisively broken today on High Volume, with an Intraday Low of 505.58 and a Closing Low of 509.79. I think it's a bit early to say AAPL's in a new Downtrend with a Lower High of 594.59. A Consolidation/Trading Range between 500 and 700 seems most likely to me at this point. Time will tell what Mr. Market decides to do.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=253318 this is what happened. AAPL was the easiest to escalate in price, it had 'followership' with the public. The shares were distributed the last third of price cycle to the public. Those who were too slow to exit, were left holding the bag. Even money managers got burned. What we call the stock market is a elaborate ponzi scheme, paper wealth created out of thin air. Look at the valuations of internet stocks, how it was justified during the boom. Ultimately the stock is only worth book value, all assets minus liabilities and future income stream.
It was inevitable when you started a 'buy the dips' thread of ET. When people are shouting buy the dips on any stock it means the strategy is finished or close to finishing.
Yes Omniscient One, with 45 month later, after the event, 20/20 hindsight. I'm a person, and it's all my fault....
So what comes next for AAPL? Just because its last Uptrend is technically over doesn't mean the stock is dead and gone. Will AAPL go into a Long Term Downtrend and fall all the way to 300? Will AAPL chop around in a Trading Range between 500 and 600, or between 500 and 400? Will 500 hold as Support and become the Low of a new Uptrend which goes to 800+? There are various arguments out there for all of these scenarios.
Who knows.. but when you figure it out please start a new thread with your next call or trade so we can do the opposite
What I find so surprising about the market is how an AAPL could consistently trade at such a low P/E multiple (currently just under 12) despite its consistent revenue and earnings growth, even throughout the Great Recession, while an AMZN trades at a multiple consistent with a company about to announce a cure for all cancers. They say the market is pricing in the rapid growth potential in these high multiple cases. Though a biotech company may warrant such exuberance prior to its drug approval, I can't imagine AMZN touching AAPL's EPS levels for many years, if ever. They're posting a loss for the year, as compared to AAPL's $45/share profit. Prior to AAPL's announcement of a dividend, I was discussing its high price with a friend, wondering why they didn't do a 10:1 split like BIDU. Seems like almost everyone I know who has money to invest was interested in investing in AAPL, but was put off by the price. Such a split would've attracted a hoard of new investors, IMHO. BIDU was a similar high flyer, like AAPL running up 700% from the recession lows. Once they split 10:1 in May 2010 shortly after reaching new highs above $700, the price continued to run, more than doubling before finally reversing the major trend this year. I doubt it would've run to $1660 without that split. It seemed like such a no-brainer to split instead of offer a dividend. If nothing else, there's a psychological tendency to buy into a split of a desired stock and to assume when a stock starts paying a dividend, their rapid growth phase is settling down.