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One of things about watching any stock too closely is that you can easily lose perspective of the environment within which it plays. Without that wider perspective you start questioning every pop, every down day, every undulation. And then on days like yesterday (Monday December 14) you start to wonder why your favorite stock isn’t performing better. You know its a great stock, backed by a great company, with fundamentals that are the envy of the entire market. So, why didn’t Apple blast off yesterday, when all the indexes did, and leaders of other sectors did. Why isn’t Apple performing the way you know it should?
Past Gap-ups are influencing the current action
Well, when you start playing around with the time scale of an AAPL chart you start seeing past market action that may be influencing the current action. Also, when you start looking at other stocks that might be considered in the same category as Apple, stocks within the tech sector, consumer discretionary, large caps, etc. You start to see more potential influencers. Apple is not an island in a deep blue sea. It is a citizen in a crowded city.
So, what one might see as manipulation, I see a stock that has risen off the March lows at roughly 2-3 times the rate as its peers. Apple is nearly 200% off it’s March lows, where most stocks are just 30 to 50%. And right now there are enough nay sayers that still refuse to believe in the rally, they think we’re in for a double dip, another crash. And they’re betting that feeling on the fastest riser, because they believe it will also be the fastest to fall, and therefore produce the biggest bearish gains.
Success Attracts All Kinds
So you have believers that are pumping their life savings into the stock, expecting it to go to 300 by years end, and can’t understand why it isn’t there already (very small percentage of traders). And then you have the hedgies and scalpers, who recognize that a stock that rises three times the rate of other stocks is extremely volatile, and can therefore be thrashed about to make spectacular short terms games. And then you have the bears, who recognize the significant opportunity that AAPL presents should it lose critical levels. This stock could drop 10 points in a single day. In fact it did the other day intra-session.
Conclusion
The fact is that AAPL is attracting attention, and therefore the volatility, that all winners attract. And during the past 8-10 weeks where the markets are clearly consolidating, as is AAPL, the bears, hedgies, scalpers, investors are all sensing huge opportunity. The problem is that their view of that opportunity is completely divergent.