Is AAPL finished?

My guess is that AAPL may be in trouble.
AAPL has shown three consecutive quarters of decelerating earnings.
AAPL hasn’t had a pocket pivot since September but has had four negative pocket pivots since then (three in the last five trading days). A negative pocket pivot means that price is near the 10 or 50-day moving average and experiences larger down volume than any up volume in the prior ten trading days.

The daily chart below shows only the bars since the entire float has changed hands, the gray bars at the left of price is the volume profile of the price that shares changed hands over that period. Assuming that this is a reasonable representation of the current portfolios of shorter-term holders there is resistance at 630 and 660 (coincident with the 50-day). AAPL has been capped on the up side by the 21-day moving average and most recently by the 10-day (approximately where the first resistance is). Short term holders are all underwater.

For longer term holders, those who bought around April, there is support just below the current price. I don’t know how relevant that is because the float has turned over twice since then. Float change-over analysis leaves out long term holders and as of September there are 4418 institutions holding AAPL, presumably many long term holders. These players are going to have to battle the more recent holders. On the positive side the small head and shoulders pattern visible on a daily chart with left shoulder 8/27 and right shoulder 10/4 has a downside price target off of this pattern of 605. We have arrived at a probable bounce location.

In April of 2009 I computed a price target for AAPL of 718 using a technique taught to me by Bill O'Neil. The technique takes the P/E of growth companies at the first stage breakout of a new bull market and expands it by 98% and multiplies that by the future estimated earnings 18-months to two years later. This technique produces some pretty good final price targets for growth companies far in advance of their arriving. Since then we got to within 2% of that target. 98% P/E expansion is used for large cap growth stocks. 130% is used on the lower cap growth companies.

In March AAPL showed some possible climax run characteristics (largest weekly spread week of 3/16, 9 of 10-days up in a row with possible exhaustion gaps during that same period). It also showed a railroad tracks formation weeks of 3/2 and 3/9. Railroad tracks often precede topping activity. There is some hesitation with this read because railroad tracks usually show larger weekly spreads.

A possible scenario is a bounce at the 200-day or right here and a rally into resistance possibly forming the right shoulder of a head and shoulders pattern where 4000+ institutions could end up being trapped.

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