No, seriously, this time it might be for real.
With cautious optimism, it's time to proclaim that Apple
) MIGHT be turning around. Let's not get too optimistic.
Apple is well known for its ability to crush any investor that
places unguarded trust in it, but the bulls finally have a good
Here's a depressing statistic: Up until Friday, Apple spent
113 consecutive trading days below its 50 day moving average.
Closing at $461.91, that put the stock 0.79 percent above its 50
DMA. Impressive? Not really but breaking the 113 day streak makes
it exciting for the bulls.
In a note to clients, going back to 1994, Bespoke notes that
when Apple closed above its 50 day after being below that level
for at least 75 trading days, the stock averaged a 6.6 percent
return with positive returns four out of seven times over the
next month. If these stats are correct, by April 22nd, Apple will
close at $492.40.
That's a level above $480-the next level of resistance
technicians will have their eye on. After that, it's $510, later,
$546, and finally, the 200 DMA currently at $561 but let's not
get ahead of ourselves.
If you're not much for all of the technical jargon, maybe the
fundamentals will interest you. The truth is that the
fundamentals, based on what we know right now, don't paint a
picture of a bull run. Stories of decreased orders from its
manufacturers, increased competition from companies like Samsung,
and the lack of any game changing product have investors largely
unexcited about Apple.
But all of the talk of raising the dividend, a stock buyback,
or a special dividend (not likely) have traders bidding the stock
up. In addition, the new Samsung phone had a less than stellar
reception. It was viewed as an unexciting upgrade. You know, much
like the last few iPhones
The BlackBerry (NASDAQ:
) product launches were very BlackBerry. They got the "well,
isn't that a cute phone," reception from the cell phone gurus
when they needed a, "wow, this is incredible," review. Apple
won't be hurt by either of these phones and for investors that's
The Bear Case
Too much excitement over Apple often results in the licking of
the wounds so let's give the bears a bit of attention.
Technicians don't much care about a move that doesn't come with
big volume. On Friday, Apple traded 14.1 million shares versus
average volume of 18.7 million. That's 33 percent lower than the
average. Looking at the past two weeks, volume has slowly
decreased making technicians wonder if the rally has legs.
The bears would also point out that just because the
BlackBerry and Samsung launches were nothing exciting, Samsung,
and the Google (NASDAQ:
) Android platform in general, are taking business from Apple.
There's no fundamental reason to get excited about Apple for the
long term right now.
Which side is right? This week will be a key indicator as the
battle for the 50 DMA really heats up. Risk/reward doesn't favor
jumping in Monday morning. Let the battle produce a trend before
committing money. Don't fall into a bull trap.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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