Awaiting Apple

The next 24 hours are going to be a pretty big deal. The two big events on the horizon are Apple’s earnings (after the close today) and tomorrow’s Fed announcement. Let’s focus on Apple.

Below is the entire history of Apple as a public company. I’ve tinted four general phases:

(Click on image to enlarge)

Here is how I would characterize each of these tints areas:

  • Yellow: Apple as a personal computer maker. It has big ups and downs, and in 1996 is looking like it could go bankrupt. Over the course of almost a quarter century, it is a fairly middling stock. Its price in 2004 isn’t any different from its price in 1987.
  • Green: This is where fortunes were made, thanks to the iPod, iPhone, and iPad. Except for the financial crisis, the stock basically never goes down.
  • Magenta: The stock is still going great but at a less furious pace. This is the Tim Cook era, and the stock is everyone’s darling, eventually crossing the trillion dollar mark with ease.
  • Grey: And here we have the most recent phase, in which a full 40% of the stock’s value is destroyed in a matter of just a few months. Apple, it seems, might be past its glory days.

OK, so what’s next then?

Well, simplistically speaking, it seems that the stock should go……UP. This is still a wildly successful company, one of the biggest in the world, and it is immensely profitable. The channel extends back over five years, and only earlier this month it tagged the lower boundary of the channel (green tints). So the natural direction, based on a lot of history, seems to indicate we’ll see Apple stronger after today’s close.

Looking even closer, the key level seems to be about $160. If we can cross above that figure, AAPL has a pretty easy shot at $175 in the days or weeks ahead.

Of course, if AAPL falls – – and, honestly, I don’t think it will, although obviously, that would be great if it did – – it would be a pretty heavy burden on the market (and almost certainly discussed around the Fed’s meeting table on Wednesday). I don’t trade AAPL myself, but I will be watching with tremendous interest.

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