Jul 26, 2012

Apple seasonal patterns with strong predictability power

Following post analyses, the seasonal share move in Apple stock and tries to extract repeating and often occurring relationships between the season and the share price trend.

Seasonality in capital markets is very common. Apple proved to follow strict seasonal patterns. Daily charts from mid-2009 indicate that there are two repeating patterns every year since 2009. The first is a bullish market which usually starts during autumn (September-November) and lasts until spring (April). The second is a consolidation period, which occurs in summer months. This relationship has been extremely strong for the observed period. 

Bull periods are strong with gain above 50%. The first one started with the broad bull market rally, which for Apple means 234% gain. The second rally, between 2010-2011, started in September and added 55% to the company market cap. Autumn 2011-Spring 2012 rally started end of November 2011 and added 75% return. 

During the summer months, the AAPL stock corrects, however that pullback is not severe and it resembles horizontal consolidation, same as the one of the 2010 summer. Summer 2011 was slightly different as the bull market ended earlier (February), thus it was longer, followed by a sharp rise in Jun-July and another horizontal consolidation until November. 

Where are we now?

The last bull market started in November 2011 and continued until April 2012. Since then, we are in a period of consolidation/correction. If above mentioned patterns are to be repeated again, we could expect current correction end in autumn 2012 (Sep-Nov period). This means start of new bull market with entry point $500-$530, determined by the parallel channel support line and 200 day moving average cross point. History has proved that whenever AAPL price touches the 200 day MA the buy signal is indicated. If we assume 50% gain, the target price is $750.

Note: The char is in log scale.
Apple price patterns
Apple price patterns

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This work with autor CapitalHubs.com is licensed under Creative Commons 3.0.