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Wednesday, April 20, 2011


An obvious look at the weekly chart shows a stock in a routine consolidation. But a closer look at the chart indicates AAPL has not left the 320 level since October 2010. (Albeit, in Oct the 320 level was resistance, and a couple of days ago it was support.) 

Basically Apple was consolidating for 7 months.  A consolidation so severe, after today's numbers, Apple's businesses (ex-cash trailing PE) has a multiple of 13.5. (This takes into account a stock price of 354 via after hours, and the current cash position.)

Despite the awesome display of product and earnings growth, whose trends are still very much intact, Apple's product-lines have been given a multiple of 13.5!

This is changing, and the chart above suggests it.  Fortunately, the fundies support the move.

From a conservative perspective, with tomorrow's open, AAPL will resume its long-term uptrend, and the chart above indicates there is room to run.  Coincidentally this is corroborated by the fundamentals. For AAPL to have an ex-cash-trailing-PE of 15 the stock price has to be at 386.  Also, for AAPL to have a trailing PE of 18 (which is below the patterned 19-22 trailing PE) the stock has to be at 377.

If we are to assume AAPL starts to trade in its normal fashion, all signs point to 400.

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