LOW VOLUME, VOLATILITY & PRICE + CORRS TURN NEGATIVE (LONG AAPL)
The strong fundamentals aside, Apple is showing signs of upside stability and momentum.
IMO after a failing bear run last week this week we are set up for a week of gains, given that friday - the naturally bearish day for stocks, apple managed to close higher, going against the trend of the previous two days of high volume and losses, and instead, carving itself out some strong support at 97-98.
reasoning for apple upside recently has been:
1. to start the febuary bull run we saw, correlation between Apples price and Vols turn negative from positive - and establish the correct relationship of lower volatility and higher price, as the greater stability provides a home for more liquidity.
- at the end of may correlations between the two did the same again - moving from positive to negative. shortly after apple recovered from 90-100. The negative relationship is still holding (infact increasing) and therefore i take it as a bullish sign, as more investors should flow into the stock.
2. The Febuary bull run was characterised by lower than average volume, as IMO, the market had less sellers in due to the cheap value apple was providing at the <100. Once again in the last 2 weeks apple is showing lower than average volume, which i am again taking as bullish. Low volume at these prices only means one thing - holders do not want to sell at these prices and thus the price must be bid up to encourage more selling.
- also the low sell side liquidity may cause the stock to trade gappy, until we reach the 100 level again, where volume may pick up again as uncertainty increases selling.
3. Volatility for apple is at yearly lows at 21 flat. Low vols in this price environment, is very bullish for the stock, as it is cheap and safe, the two characteristics investors seek. Further, it was in the may-June period 2015 where vols were last at 21 flat AND also when apple made its record highs several times at 134, Thus, the low vols and previous price action at the same time last year gives me a positive outlook on the stock.
This week id like to see a 101 close, ideally a 103 close. I believe apple is cheap even at 115-120 given its only 11/2x p:e for a leading tech company which is low.
Apple risk at these prices is super low, I am personally buying apple at any price below $100 with a 6-12 month target in line with the market at 120+.
IMO after a failing bear run last week this week we are set up for a week of gains, given that friday - the naturally bearish day for stocks, apple managed to close higher, going against the trend of the previous two days of high volume and losses, and instead, carving itself out some strong support at 97-98.
reasoning for apple upside recently has been:
1. to start the febuary bull run we saw, correlation between Apples price and Vols turn negative from positive - and establish the correct relationship of lower volatility and higher price, as the greater stability provides a home for more liquidity.
- at the end of may correlations between the two did the same again - moving from positive to negative. shortly after apple recovered from 90-100. The negative relationship is still holding (infact increasing) and therefore i take it as a bullish sign, as more investors should flow into the stock.
2. The Febuary bull run was characterised by lower than average volume, as IMO, the market had less sellers in due to the cheap value apple was providing at the <100. Once again in the last 2 weeks apple is showing lower than average volume, which i am again taking as bullish. Low volume at these prices only means one thing - holders do not want to sell at these prices and thus the price must be bid up to encourage more selling.
- also the low sell side liquidity may cause the stock to trade gappy, until we reach the 100 level again, where volume may pick up again as uncertainty increases selling.
3. Volatility for apple is at yearly lows at 21 flat. Low vols in this price environment, is very bullish for the stock, as it is cheap and safe, the two characteristics investors seek. Further, it was in the may-June period 2015 where vols were last at 21 flat AND also when apple made its record highs several times at 134, Thus, the low vols and previous price action at the same time last year gives me a positive outlook on the stock.
This week id like to see a 101 close, ideally a 103 close. I believe apple is cheap even at 115-120 given its only 11/2x p:e for a leading tech company which is low.
Apple risk at these prices is super low, I am personally buying apple at any price below $100 with a 6-12 month target in line with the market at 120+.
