Tuesday, May 28, 2013

Apple Reboots

With news over the weekend of a fresh antitrust investigation of Apple's sales tactics by the European Union, we thought we would update some of the Apple charts from our more comprehensive note back in March (see Here) and give an opinion or two. 

Since removing our bearish bias in April with expectations of a countertrend bounce - the stock has stabilized and now has the potential to rekindle lost momentum with a material change in trend higher. While surprising as that may be, the momentum comparative with oil (circa 2008) that has kept us on the right side of the tracks since last December has pointed to this timeframe as a reversal. In 2009, oil made a long-term low some 32 weeks after its blowoff top. With Apple today, the most recent low was made 30 weeks after the high this past fall. 

The chart below now aligns the comparative lows with the respective momentum profiles. 
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As noted back in March, although not as severe a decline as encountered in oil's breathtaking unwind in 2008, the momentum profile and price structures of the build and breakdowns were quite similar. Namely, the frictionless and scarped declines - painted with positive RSI divergences. If the relative strength divergences sound familiar (see Here) - it's because the gold miners have walked a similar path.  
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Contrasting the two previous peaks which also culminated with parabolic runs by the largest market cap companies in the world, you will notice that both PetroChina and Microsoft were in similar performance glide paths at this point in time. While the equity markets in 2007 turned down with PetroChina, Microsoft peaked some 36 weeks before the broader market (SPX) finally rolled over. Although it is our expectation that Apple has made the turn higher - this week marks the 36th week since Apple topped last fall. 
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By many fundamental, sentiment and technical extremes, the equity markets should have slowed and corrected their historic ascent weeks ago. But as we have noted and for lack of a better description - it is what it is. Highsight 20/20, it appears the Meridian's demarkation between rational and irrational trends has lived up to its reputation once again.  
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As always - Stay Frosty


*  All stock chart data originally sourced and courtesy of www.stockcharts.com 
*  Subsequent overlays and renderings completed by Market Anthropology