What Apple’s Charts May Be Telling Us

Apple's ascent leaves even most technical analysis gasping

   

What Apple’s Charts May Be Telling Us

Did you get made fun of for buying Apple (NASDAQ:AAPL) at $300? $400? Well, now you should be laughing all the way to the bank.

To say the stock’s been in a monster uptrend is putting it mildly. The shares have gained 45% year-to-date (compared to a 17% rise in the tech-rich Nasdaq). They’re up 58% since Oct. 5, when news broke of Steve Jobs’ passing. The stock scaled $500 just over a month ago and has its sights set on $600, popping above it briefly this morning (before closing down on the day at 585.50). Initial interest in the new iPad is spurring analysts to boost their targets on the stock to $700.

One has to ask: Is there any end to this rocket ride?

Reviewing the Century Marks 

When it comes to traditional barriers of technical support, such as moving averages, former highs, and historical resistance levels, Apple is pretty much out of the woods. It’s 20-day moving average (currently at $532.62) held firm on a recent pullback, and this week the stock easily surged through very short-term resistance at $550.

Screen Shot 2012 03 14 at 3.58.06 PM 300x182 What Apple’s Charts May Be Telling UsClick to Enlarge

With nothing bearing down on the shares from overhead, some technicians turn to century levels as areas of theoretical resistance. But even century levels have increasingly become a non-issue for Apple:

Screen Shot 2012 03 15 at 9.07.15 AM What Apple’s Charts May Be Telling Us

It took the stock 900 days to first top $200 after clearing the $100 level and just 150 days to glide from $400 to $500. It initially breached the $600 level in just over a month. And while each 100 points becomes a smaller piece of the overall pie — $100 to $200 is a 100% advance while $500 to $600 is a 20% move — the fact still speaks to the ease with which Apple is making these headline-worthy moves. AAPL barely hesitated crossing $500 and doesn’t seem to be stalling at $600, either.

Overbought…and Loving It?  

Some analysts put a lot of stock in the Relative Strength Index (RSI) indicator — after all, it’s been around since the late ’70s. It’s an indicator measuring technical momentum on a scale of zero to 100 by tracking gains relative to losses. This can be interpreted as “overbought” versus “oversold,” as high ratings indicate a lot of buying strength and low ratings point to a lot of selling power.

Apple’s RSI, tracked over a 14-day period, stands at 83.16. As a method of comparison, RSI readings are deemed “unusually high” when they move above 70. But plenty of other analysts think these readings don’t mean much if underlying stock (and its company) is strong.

The stock’s RSI reading has reached similar heights twice in the past three years — in September 2009 and August 2010. Both prior occasions coincided with a period of consolation in the shares, which then resolved in continued uptrend.  While this is something to watch, it shouldn’t be cause for alarm.

Screen Shot 2012 03 14 at 3.58.16 PM 300x219 What Apple’s Charts May Be Telling UsClick to Enlarge

Blood, Sweat & Tears once reminded us, “what goes up, must come down.” Will Apple be able to defy gravity? If not, when will it take a breather? Put your prediction in writing in the comments section below.

As of this writing, Beth Gaston Moon owns shares of Apple.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/what-apples-charts-may-be-telling-us/.

©2014 InvestorPlace Media, LLC

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