Friday, May 28, 2010

Apple Inc. (AAPL) - Shows Relative Strength

Above is a daily chart of Apple Inc. (AAPL) and in the lower panel is a ratio line or relative strength line of AAPL vs. the S&P500. As you can see this stock is not only in an uptrend but the ratio line is making new highs! A rising ratio line means AAPL is outperforming the S&P.

Apple Inc. is also heavily weighted in the Q's (NASDAQ) which makes this stock a good leading indicator for technology stocks. Years ago people used to say watch General Motors if you want to know where the Dow Jones Industrials are headed, well today I think we can update that saying to watch AAPL if you want to know where the NASDAQ is headed. Of course there are other factors that affect stock prices but AAPL is just one of several key factors to consider.

Today was a good example of AAPL's relative strength. The entire market was down today but AAPL manged to close up over 1%.  This is one very impressive stock!


Anonymous said...

yes... one impressive stock but more importantly one impressive company. the current valuation with a ttm p/e of 21 and fwd p/e of 16 is approx the same as it was when the price was 100 and the us financial was coming to an end a year and a half ago. how many companies that have grown their stock 150% still have the same relative valuation they had at near the bottom? especially a multibillion corporation like apple. comments that it is overvalued, overhyped, etc are not looking at the earnings growth. the p is just barely keeping up with the e.

Kevin said...

Good points David


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