Apple’s stock price is like a coiled spring

“My big-picture trading-pattern work argues that Apple completed a major move up from its $55 (post-split) low April 19, 2013, to its $136.20 all-time high April 27, 2015,” Mike Paulenoff writes for MarketWatch.

“Action in Apple’s stock since April’s record high has taken the form of a large, sideways, so-called coil-type digestion pattern, which my work indicates is at or nearly completed ahead of a big increase to the upside,” Paulenoff writes. “As long as coil support at $114.22 to $111 contains weakness, watch for Apple to test and hurdle $136.20 to new highs.”

Paulenoff writes, “This bullish view is supported by the fact that the post-April digestion pattern has unfolded in the upper 40% of the prior two-year bull leg (ignoring the Aug. 24, 2015, tail from $104 to $92).”

More technical trading gobbledygook in the full article here.

MacDailyNews Take: Yeah, but what do the entrails say?

9 Comments

  1. Investors need only look at a simple 2yr, 5yr, 10yr, 15yr, or 20yr stock price graph, adjusted for splits, to feel comfortable with the stock price trends. That, together with Apple’s sub 13 PE, $200+ billion in cash, very solid fundamentals, not to mention continued year over year growth should assure you that Apple remains a solid long term investment.

    You poor traders have to deal with these fish oil voodoo peddlers.

    1. Not to quibble over a solid post, but I like to consider Apple’s net cash and security position after taking into account its debt. So it is really around $150-$160B. Wish I had that problem. I would be racing Elon Musk to Mars.

  2. I hope they’re not going to start that coiled spring nonsense like they did in early 2012 just before the coil spring completely broke in 2013. This is simply a poor analogy for Apple stock. Most stocks simply go up without the need for some analogy. Investors either buy a stock or they don’t. Hardly anyone is buying Apple so there’s no spring being compressed. If they’re talking about some spring based on Apple’s relatively strong fundamentals then Apple is in very poor shape because there are plenty of companies with much weaker fundamentals who’ve blown past Apple this year in share gains.

    A better analogy for Apple would be the gardener who spends all his time and effort tending garden with careful watering, fertilizer, weeding and good soil and yet his plants still don’t grow. Maybe Tim Cook is a gardener without a green thumb.

    The big investors lack interest in purchasing Apple stock because the company isn’t seen as being worth the effort with such lousy returns to shareholders. One whole year of the general market practically soaring and Apple is up a lousy 1%. It’s absurd. A bank account gives that much in the way of returns without the risk.

    Buy Apple stock or don’t but don’t expect much in terms of share gains. It’s simply not going to happen. Traders know what stock to short and Apple is everyone’s short without question. Who wears short-shorts? Apple wears short-shorts-shorts.

  3. Obviously Apple is performing well, but when it comes to AAPL, it’s hard to know what to expect.

    When it comes to analysing shapes, it’s worth noting that the shape of a coiled spring is similar to that of water circling an emptying bowl. One is a more advantageous situation that the other.

    Logic says that AAPL is undervalued and should rise sharply, experience says that anything can happen and that logic is the least significant of the variables affecting AAPL.

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