7 Great Lessons to Learn From Apple in the Last Year

Apple (NASDAQ:AAPL) has had a roller coaster of a run over the last 12 months. By utilizing basic technical analysis there is a wealth of knowledge to be learned from Apple's stock chart. This post will highlight 7 great lessons every investor should take to heart.

2007 was a year of continuous all time highs for Apple. After peaking at a new high of $202.96 on December 27th, 2007 the stock tumbled over 40% in January alone as the overall market tanked. Since then Apple rallied back above $190 in May but has struggled since.

Below are both a weekly and a daily look at Apple (AAPL) which will be broken down below:

apple weekly stock chart

apple daily stock chart

1. The blue 1 shows where Apple broke out of base in September to claim fresh all time highs above $148. This break out eventually lead to the stock breaching $200 a share in December.

2. The blue 2 shows a very key breakdown in the stock as it fell back into its base below $196 for the 2nd time in three weeks.. This sell signal was critical for long term investors as Apple went on to lose over 40% in January.

3. The blue 3 shows where the bulls took control back of the stock after establishing a small base from January through March. The breakout above $140 to fill the gap on 1/23/08 was the start of a fresh rally that would lead the stock all the way back to the $190 level.

4. The blue 4 shows a small bull flag that was setup in early April. Apple stock ran another 25% from the time it broke free from this small setup.

5. The blue 5 shows where Apple later found key resistance at $180 a share. In fact we posted on Apple's $180 resistance back in August. This $180 level was never broken and eventually lead to the stocks next big price slump.

6. The blue 6 shows where Apple could not hold up at $154 support and fell below claiming lower lows. This was another key sell signal for the stock.

7. The blue 7 shows how Apple has tumbled over 40% in September and now has gapped below long term support at $120 which can be more clearly seen in the weekly chart.

Apple's stock chart is a great example of the effects that a souring economy and crummy stock market can have on a once big tech high flier. It offers stock chart education that is priceless for any investor.

---> Next Chart, Identifying 8 Key Points on Google’s Stock Chart

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Comments

  1. Posted by rhinodude47 on September 29, 2008 at 4:41 pm

    Great chart Blain, looks like both the bulls and the bears had their way with Apple over the last year. There isn't much the stock can do though when the NASDAQ is falling 9% in a single day.

  2. Posted by The Stock Speculator on September 29, 2008 at 5:27 pm

    Nice work Blain. You've been tearing it up recently.

    I'll comment on #7, in light of todays action. O'Neil did some interesting work with past leaders and found, on average, they fall off 70%+/- (IIRC) from their all time hi's.

    Take a look at RIMM as it is being ravaged. GOOG, POT,CF,MA,V,ISRG,CROX, FSLR, JRCC all these former leaders that were over loved and over owned may have a hard time here as rotation continues and they are sold off.

    Again, nice work on the postmortem.

    TSSS

  3. Posted by Blain Reinkensmeyer on September 29, 2008 at 5:49 pm

    "I’ll comment on #7, in light of todays action. O’Neil did some interesting work with past leaders and found, on average, they fall off 70%+/- (IIRC) from their all time hi’s."

    So are you saying that these stocks once the end their bull runs fall 70% on average? From what I understand an average correction during a bull run can be 10-20% but still remain in its general uptrend.

    70% is pretty intense, do these stocks historically return to previously highs or what?

  4. Posted by The Stock Speculator on September 30, 2008 at 12:32 am

    Hey Blain,

    Short answer: yes, 70%.

    Longer answer:

    I'm talking specifically about the true leaders. The stocks that have run up 100,200,300% :mrgreen: :mrgreen: or more during their bulls runs. The ones that are over owned and over loved.

    Recently, let's look at CROX. Gone. Look at X. SID. POT. CF. STP. SPWR. JRCC. DRYS. GHM. MA. While not all at the 70% level YET, well beyond 10 - 20%.

    Also factor in that they haven't show me that the selling is done in these issues yet. I can real off another dozen wonders that just died. Remember Toll Brothers or Pulte Homes? PALM? Lam Research? How about the mighty TASR?

    Stocks that once reaped me huge fortunes are now garbage. Sometimes they reset and base. They get a second act and find a way to reinvent themselves. QCOM, DELL & IBM were basing nicely right before the panic. TOL is at 52 week hi's.

    Most of the time however, they are like TASR. A one hit wonder that falls out of favorand never to be heard from again.

    O'Neil comments on this can be found in HTMMIS on P. 54 (elsewhere too I believe, but I'm too tired to look). I have a good friend and mentor who did some work to prove out O'neils theory and +/- it works. I've seen his work and did my own as well.

    Former leaders die. New leaders take over.

    Go back and think of all the hi-flyers you traded or missed during their bull runs. Look at where they are now compared to their hi's. Most of the time the fall is unreal.

    I hope this helped.

    TSSS.

    PS - I'll proof read in the AM and correct any mistakes I made. Going to bed now.

  5. Posted by Alex - My Trader's Journal on October 1, 2008 at 5:00 pm

    Great chart! What do you think, can AAPL hold at 100? I'd like to think that early 2007 range could offer support, but until the economy turns that's a tough bet to make.

  6. Posted by Blain Reinkensmeyer on October 2, 2008 at 12:19 pm

    Hey Alex, who knows honestly. It still makes me awe to see the stock trading around $100 considering how bullish everyone was not even 6 months ago.

    Good luck out there!

  7. Posted by Blain Reinkensmeyer on October 2, 2008 at 12:23 pm

    Wow thanks for the extra explanation, makes perfect sense. Looking at these stocks now it blows me away to think 70%ish is accurate and real.

  8. Posted by Canadian Money on October 4, 2008 at 12:52 am

    We may be looking at a double top for Apple, one that has a target near $40. It could go lower. Neckline near $120 will impressive volume on the break below the neckline.

    I know it is hard to believe. Mark your calendar about 6 months from now to come back and check this forecast.

    CM