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Apple Inc. (AAPL) Has ‘A Lot More Damage to Come’: Technical Analyst

Apple Inc. (NASDAQ:AAPL)‘s “battle lines” are starting to shape up rather clearly. On one side, we have the fundamental investors, who are deeply committed to the stock, due to its superior track record, attractive valuation multiples, boatload of cash, and breadth of product offerings. On the other side of the aisle, we have the technical analysts, who believe that the “death cross,” accelerated volume, and a weak MACD are just a few of the reasons that you’d be better off avoiding AAPL.

Apple Inc. (AAPL)

On CNBC this afternoon, one esteemed chart-watcher was calling the top on Apple Inc. (NASDAQ:AAPL). Tom McClellan, Editor of The McClellan Market Report, discussed his sentiment toward the stock, mentioning that its chart compared eerily with those of RCA in the 1920s and Microsoft Corporation (NASDAQ:MSFT) in the early 2000s. McClellan had quite a bit to say; here are the highlights:

“What a stock price pattern tells you, is not so much about the company; it tells you about the people that are invested in it, and how they are behaving […] what the resemblance is saying to us is that the behavior of the investors in RCA in the twenties, and the behavior of the investors in Apple now, is almost exactly the same. There is a set of physics involved with putting in a top in a major tech bubble company like Apple, or like RCA, or like Microsoft and others in 2000 […] We’re getting a nice pop that’s right on schedule this week; a lot more damage to come next year. It’s not going to be a good time for Apple the stock.”

On the whole, it’s apparent that McClellan makes the distinction between Apple Inc. (NASDAQ:AAPL) “the stock” and Apple “the company,” mentioning that from a strategic standpoint, there’s still a lot of success to be had. The key point that the market technician is making, though, is that the ebbs and flows of Apple’s daily price movement are behaving nearly identical to the movements of “major tech bubble” stocks like 1920s-era RCA and 2000s-era Microsoft.

While pure value investors are likely ignoring this analysis, it’s important to note that Tom McClellan was named Timer Digest‘s No. 1 “long term timer,” so there’s clearly some pedigree here. In our opinion, the basis of McClellan’s argument is philosophically similar to those made by others who mention that investors’ psychology is out of whack. Furthermore, the sheer volume of Apple Inc. (NASDAQ:AAPL) trading that is machine based – approximately 50-70% – has an impact on the stock’s direction as well.

In short, there are many factors at play, and obviously many different opinions. Let us know how you’re trading Apple Inc. (NASDAQ:AAPL) in the comments section below.

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