Dan wrote a library of posts this week about AAPL (Tuesday, Wednesday and Thursday), discussing the Beats acquisition, the iPad and the tablet industry, and the potential price wars coming in the smartphone market, respectively. Here was his closing remark from Thursday’s post:
So I am now going to end this post with my comments from Tuesday’s and Wednesday’s posts closing paragraphs. From Tuesday:
As for Apple, with the stock likely to touch the prior all-time highs this week, highs that this guy thought would take a heck of a lot longer than 22 months to re-take, I think it is important to remember that sentiment can be a force to be reckoned with when it comes to investing. While Apple’s ascent back to the highs has little resemblance to the mania that existed in 2012, the stock has rallied 35% in the past 3 months, so expectations are quite a bit higher. That might mean some near-term struggles for the stock. However, the long-term business machine that is Apple Corp. is still doing a fabulous job of pleasing customers around the world, including my daughter and me.
So after my love-fest on Apple yesterday (from a consumer standpoint – MorningWord 7/29/14: King of the Beats – $AAPL), this morning a word of caution at a time when it feels like the entire investment community is in universal agreement that there is very limited downside in the stock heading into the iPhone 6 launch in September.
Technically, AAPL is at an interesting juncture. It is still up 20% year-to-date, a major leader compared to the 4% year-to-date return in the SPX and the Nasdaq. The stock’s chart indicates some potential risk in the near-term, though the fundamental story remains solid.
AAPL turned lower this week just below its all-time high from Sept 2012 and the psychologically important $100 level:
Nevertheless, the uptrend is still cleanly in tact as AAPL’s 50 day moving average, now around $93.25, is firmly upward sloping. That is the first spot to watch, with $90 an intermediate term support level.
However, aside from AAPL’s inability to get above the $100 resistance level, there is one more reason for caution. The stock’s upward momentum has been steadily increasing even as the stock has made higher highs and higher lows since early June:
The lower relative strength panel is a measure of a stock’s momentum, and it has made lower highs over the past 6 weeks, even as the stock has made higher highs. This divergence does not necessarily suggest a selloff, but it often indicates a decline in overall buying aggression, and could lead to consolidation in AAPL over the next few weeks at the least, if not an outright decline.