AAPL seems to be forming a head and shoulders pattern. I computed in 2009 (first stage base) a 98% P/E expansion price target of $718. This technique takes the breakout P/E (20) multiplies by 1.98 and then multiplies that result by the 2 year future EPS estimate (2011, at the time it was $18.13) to get $718. I find that chasing earnings estimate revisions does not work in a secular bear market so I keep this figure as the future topping price estimate. This process works out so often that it is scary.

98% P/E expansion is used for large cap growth stocks, 130% is used for smaller cap stocks.

AAPL got to within 1.8% of this target this year and probably topped. A simple H&S downside price target is now $316 presumably to happen next year if AAPL breaks the neckline to the downside.

Action of leading stocks have implications for the general market. I suspect that this means the NASDAQ high for the year has been set and that we are forming the right shoulder on the NASDAQ. The same H&S calculation suggests a downside NASDAQ target of 2367 which is close to a 50% retrace of the 2009-2012 bull market.

I am currently long BCEI, CVLT and KORS. KORS is not acting well and may not survive the day.