Yesterday, we discussed the possibility that Apple Inc. (NASDAQ:AAPL) was a worse investment than Google Inc (NASDAQ:GOOG), so let’s continue this process today. On CNBC recently, Louise Yamada (one of the world’s foremost technical analysis gurus), was analyzing the chart of the Cupertino-based company.
*Chart does not automatically update; time of quote is provided above.
On the program, Yamada first analyzed the long-term movement of the S&P, noting that there are “sell signals in the momentum study” of the broader market average, specifically in a “negative divergence” between price and the MACD indicator. On her outlook, Yamada said that while the last two times this signal occurred in 2010 and 2011 there were double-digit declines that followed, there is no certainty that the same can be said about the situation we currently face. However, she mentioned that this historical behavior “does suggest that the negative divergence could carry a little bit lower.”
Regarding Apple Inc. (NASDAQ:AAPL) specifically, Yamada suggests that the tech giant may be “becoming a new bellwether,” pointing out that once shares eclipsed roughly $700, “the momentum failed to get above the prior level,” which hadn’t occurred in nearly four years. The chart guru added that the indicator was “a little bit unsettling,” saying that “there is a possibility that it could come under the recent […] low.” In Yamada’s opinion, her “best case scenario” is that the stock “goes sideways,” adding that “you hate to see it rally right up because then other people may come in and take profits.”
You’re probably already aware of the bullish argument for Apple Inc. (NASDAQ:AAPL), i.e. that its shares trade at relatively attractive earnings and cash flow multiples given its advantages in each of those areas, but the technical argument is compelling. What are your thoughts on the debate between technical and fundamental analyses? Does it matter when investing in a stock like AAPL? Let us know in the comments section below.