Friday, September 13, 2013

Apple’s Supply and Demand Problem: AAPL

Last week on CNBC, I was asked to talk about the golden cross in Apple. To this day I don’t know who came up with this golden cross and death cross stuff, but I still haven’t seen any evidence that they lead to good entry points, long or short. To me,  the 50 day moving average getting above the 200 day doesn’t mean a thing. I’d much rather focus on the supply and demand.
When it comes to $AAPL, I think it’s very simple. After the initial collapse that started a year ago next week, Apple found support near the 500 level for a few months before breaking down once again at the end of January:
9-11-13 aapl
The way I see it, any attempt to get back above that 500 level should fail until that supply, formerly demand, dries out. And to keep things symmetrical, it should take a few months, not a few weeks, just like back in December and January. The 500 price is a big psychological barrier, but more importantly we know there is supply here. Once we get through last month’s highs, we know that the sellers are probably done.
I thought this was worth bringing up so that we take note of what’s happening between the buyers and sellers, instead of worrying about their new phone or whatever is or isn’t going on with them in China. Forget the company, this is a stock. And it’s only going up if there are more buyers than sellers. It’s that simple.
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