Chart of the Day – $AAPL vs. $P on Talking Numbers

by Enis December 4, 2012 12:31 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today around 3:20 to 3:30 pm EST on CNBC:

AAPL is apparently launching a Pandora-like site as its tentacles continue to expand throughout the internet sector.  Putting this niche news story aside though, what’s the next move in AAPL?

This is a 3 year chart of AAPL with the 200 day ma in red:



The stock was in a steady uptrend, never staying below the 200 day ma for more than a few days.  The recent selloff was a clear trend change, as the stock breached the 200 day ma with severe gusto.  Since the capitulation day in AAPL near $500 almost 3 weeks ago, the stock has rebounded back to test the 200 day ma near $600.  However, its failure to regain that level is more confirmation of a long-term trend change, and I see $600 holding as resistance going forward.  AAPL’s next direction is lower from here.

I currently own the AAPL Jan13 540 / 580 1×2 call spread, and I plan to hold on to this trade for a while, since its sweet spot will be a gradual move lower over the next couple weeks.  My strategy might change depending on the velocity of the next selloff.

As for Pandora, this is a relatively simple chart:



This chart of P since its IPO shows a clear downtrend of lower lows and lower highs.  Perhaps the most bullish argument one can make is that the stock has a short interest that is 45% of the float.  Clearly, there could be some pent up buying on any hint of good news.  But I have no interest in speculating on that in a name with a poor fundamental story and a continued series of lower lows and lower highs.