Customer Service 1 (888) 261-2693
Advanced Search

Has Apple Peaked?

By Jeff Clark
Thursday, March 3, 2011

Apple (AAPL) is a remarkable company. Nobody is more innovative. Nobody is more creative. And nobody is more effective at getting millions of consumers to trade stacks of hundred dollar bills for shiny technological gizmos.
 
Shareholders have been richly rewarded. AAPL shares are up 360% in just two years, and the stock is trading within spitting distance of a new all-time high.
 
Indeed, the company is firing on all cylinders. But after yesterday's action, I have to ask... Has AAPL peaked?
 
Stop laughing. It's a reasonable question.
 
For the past couple years, every time Apple introduced a new product, its stock rallied to a new high. Every new iPhone boosted the market cap. The release of the original iPad launched a series of new all-time highs for the shares. And every time... every single time... there were plenty of analysts and talking heads suggesting the stock had run too far, too fast, and was near a peak.
 
But not yesterday.
 
Yesterday, Apple unveiled the iPad 2 – the newest weapon in its technology arsenal. It was a big, big deal... a media circus. Steve Jobs even rose from his sick bed to make the introduction.
 
This time, however, AAPL didn't make an all-time high. Oh sure, it rallied three bucks right after Steve Jobs hit the stage. But the stock is still a good 10 points below its high from last month. More noticeable, however, is the lack of anybody, anywhere, willing to say anything bearish about the stock.
 
Allow me...
 
All the hype over the iPad 2, and the virtual media love-fest surrounding Jobs' return to the corporate stage should have been enough to push AAPL to a new all-time high. The fact that it didn't, suggests the stock is tired and in need of a rest. The following chart suggests the same thing...
 
 
 
As you can see in the chart above, the stock is tracing out a potentially bearish head (H) and shoulders (S) pattern – which signals the reversal of a trend from bullish to bearish. If AAPL breaks below the rising support line, currently at about $340, the pattern projects a move all the way down to $320.
 
It's always dangerous to buy into a stock just as the media is hyping a new product or a new technology. The unveiling of that product usually marks at least a short-term peak in the company's shares. Apple, however, has always managed to avoid that curse.
 
It doesn't look like it'll avoid it this time, though.
 
A drop below $340 will be the sign that the short-term trend has changed for AAPL. Aggressive traders can look to go short at that level.
 
Anyone looking to buy the stock should wait for something around $320.
 
Best regards and good trading,
 
Jeff Clark




Further Reading:

There is a fundamental change taking place in the PC industry. Consumers are buying tablets instead of laptops. And according to Goldman Sachs, tablets will replace one in every three PCs in 2011, forcing the big-techs to adapt their business models.
 
Frank reveals the three big-tech companies strong enough to buy their way into the tablet industry here: The Death of the PC Industry.
 
And Larsen shows the benefits of investing in U.S. tech stocks... in Asia here: The Big Opportunity for Today's Risk-Shy Tech Investor.

In The Daily Crux
Market Notes
Gold and silver both jump to fresh highs.
 
Hercules Offshore rockets 151% in six months... most offshore drillers are up more than 50%, as well.
 
U.S. dollar fund UUP sitting just half a percent off its multiyear low.
 
Volatility fund VXX rises about 8% in two days.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1308.44 +0.2% +17.0%
Oil (USO) 41.39 +2.3% +6.7%
Gold (GLD) 139.92 -0.1% +26.0%
Silver (SLV) 33.84 -0.1% +104.4%
U.S. Dollar 77.04 +0.2% -4.3%
Euro 1.39 +0.6% +1.9%
Volatility (^VIX) 20.70 -1.5% +8.6%
Gold Stocks (^HUI) 575.65 +0.2% +36.4%
10-Year Yield 3.46 +1.5% -4.2%

World ETFs
Symbol Price
Change
52-Wk
USA (SPY) 131.21 +0.2% +18.8%
Canada (EWC) 33.63 +0.5% +26.7%
Russia (TRF) 23.85 +1.8% +21.4%
India (IFN) 30.13 +1.0% +9.5%
Israel (ISL) 16.42 -0.1% +8.7%
Japan (EWJ) 11.41 -0.9% +14.1%
Singapore (EWS) 13.11 +0.2% +20.9%
Taiwan (EWT) 14.79 +0.3% +25.0%
S. Korea (EWY) 57.87 +1.2% +24.1%
S. Africa (EZA) 69.44 +2.2% +28.2%
China (FXI) 42.56 +0.9% +5.7%
Lat.America (ILF) 52.33 +1.5% +16.2%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service (OIH) 161.75 +1.0% +32.6%
Big Pharma (PPH) 65.56 +0.3% +3.7%
Internet (HHH) 74.77 +1.1% +32.1%
Semis (PSI) 17.84 +1.7% +33.3%
Utilities (XLU) 31.84 +0.2% +10.9%
Defense (PPA) 19.67 +0.1% +11.2%
Nanotech (PXN) 10.03 -0.2% +1.9%
Alt. Energy (PBW) 10.51 +0.1% +9.4%
Water (PHO) 19.36 +0.5% +15.5%
Insurance (PIC) 16.75 -1.2% +19.3%
Biotech (PBE) 20.88 +0.5% +11.8%
Retail (PMR) 19.86 +0.2% +20.9%
Software (PSJ) 26.14 +0.4% +22.8%
Big Tech (QQQQ) 57.14 +0.5% +26.4%
Construction (PKB) 13.60 +0.9% +21.2%
Media (PBS) 15.02 +0.8% +21.8%
Consumer Svcs (IYC) 69.78 +0.2% +22.7%
Financials (IYF) 58.97 -0.6% +12.7%
Health Care (IYH) 67.78 +0.4% +5.3%
Industrials (IYJ) 68.80 +0.5% +27.7%
Basic Mat (IYM) 78.22 +0.7% +29.9%
Real Estate (IYR) 58.48 -0.8% +31.2%
Transportation (IYT) 90.47 +0.9% +22.2%
Telecom (IYZ) 22.84 +0.2% +24.1%

Recent Articles
  • The Key to a Double or Triple in the Next Huge Energy Bull Market
    By Matt Badiali Wednesday, March 2, 2011
    There is a small group of high-risk junior miners working down here. These are worth speculating on... but only by experienced investors.

  • The Best-Looking Trade for This Week
    By Jeff Clark Tuesday, March 1, 2011
    There's no such thing as the "perfect trade setup." But this is as close as it gets...

  • The Big Opportunity for Today's Risk-Shy Tech Investor
    By Larsen Kusick Monday, February 28, 2011
    While many investors still look at Asia as a risky place, they don't realize it's the best market in the world for big U.S. tech companies.

  • Weekend Edition
    By Porter Stansberry Saturday, February 26, 2011
    Please, if you haven't yet taken my warnings seriously... not much time is left.

  • The Death of the PC Industry
    By Frank Curzio Friday, February 25, 2011
    HP is a major seller of laptops. In fact, it's the company's largest segment. To make matters worse, HP is releasing its own tablet this summer. The company is about to cannibalize sales in its PC segment.