APPLE (AAPL.O)

Though one share of Apple still not as valuable as one ounce of Gold, Apple with its products and its value in terms of market cap has been widely followed and discussed over the past five years. Every day I go through hundreds of charts and analyze different asset classes and I come across great opportunities that I share with you here on this platform. In this post I’d like to show a remarkable similarity between two strong uptrends. These uptrends drew investors attention and they have been widely discussed and followed in the financial media in the past few years. But before I analyze these two charts I would like to give a short definition of a parabolic move.

Parabolic trend is an exponential curve. The shape of the curve is parabolic and it reflects the acceleration in price activity. The curve (price) starts off almost as a horizontal line. The slope of the curve (price) increases exponentially as price action moves higher. The parabolic curve eventually develops to a point where the last points on the curve create a vertical line. The curve is then completed and so is the trend that it defines. Parabolic trends are momentum driven and when the trend ends, the sell-off is often dramatic and substantial.

Gold, in the second half of 2011 had a parabolic move. This was part of the continuing long-term uptrend that took off from $1,570 levels and reached $1,909 levels in less than two months. Interestingly, price reached the upper boundary of the long-term trend channel at $1,900 levels and entered into a multi month correction which started with a sharp sell-off.

Similarities between the uptrends on APPLE and GOLD  caught my attention while I was analyzing the technology stocks in U.S. During the uptrend APPLE respected the long-term moving average and found support at each correction. It also trended higher in a clear trend channel. The exciting part of this uptrend is the last run off from $400 levels to $526 levels in less than two months. The parabolic move reached the upper boundary of the long-term trend channel. Price behavior, technical indicators and the duration of the trends are similar for APPLE stock price and GOLD.

Is this an intermediate term peak for APPLE and can the stock price enter into multi month correction? Can the correction start with a sharp sell-off?