Chart of the Day – 5% plus days in AAPL

by Enis May 22, 2012 7:16 am • Commentary

AAPL was the second-best performer in the SPX top 100 stocks yesterday, ending higher by 5.83% (NOV was up 5.91%).  Even though AAPL has had an incredible 3 year run, yesterday was only the 11th time since the March 2009 low more than 3 years ago that AAPL shares were up by more than 5%.  I have circled all of the other instances in the chart below:

There were a few instances off the March 2009 low, a couple times during the swoon in 2010, a couple times during the swoon in 2011, and 4 times this year (more than in either 2010 or 2011).  Interestingly, there were 9 instances during the financial crisis in fall 2008 (I chose not to include it on this chart since it was too cluttered), but that was with VIX consistently above 50.  With VIX between 15 and 25 throughout all of 2012 so far, 4 instances is quite a lot, especially for the largest company by market cap in the world.

This emotional, volatile price action is another reason why owning AAPL options to express your directional view, as I mentioned in the CotD last week, makes sense to us.  As George Soros said, “Short term volatility is greatest at turning points and diminishes as a trend becomes established.”  Just as the fall of 2008 was a volatile turning point before AAPL established a long 3 year uptrend, this type of short term volatility is worth watching to assess whether it’s a new change in the long-term trend.