Stock Update: AAPL Where to Now? A Long Term View Part 1

What an amazing ride it has been for Apple since my last entry the end of June where we were at around $260 and looking at a pull back which is what we saw happen ~$240 early July and even lower in August to ~$236 and not breaking out beyond $263 until September. During this time, iPads were being released around the world driving up earnings and giving positive momentum to the stock sending it above $300. What is next in store as we head into the end of the year with U.S. mid-term elections taking some of the focus and then onto the holiday season?



It may be a good time to take a breather and look at the bigger picture in terms of a monthly 5 year chart and look at what has been going on.

Firstly let's look at volumes since 2007. Interesting that the monthly volumes have been very light in 2009 and 2010 compared to prior years with the highest number traded in May 2010 of just under 675 million shares. Nevertheless, the stock has climbed higher. This is a comment often heard in the media and the concern here is that fewer investors are chasing the stock higher and is an issue around a lower diversification the investor base which may lead to an increase in risk for those participating as there are fewer opinions out there than there were before. However, it could be that we are getting a better quality of participants and fewer 'speculators' in the markets by way of hedge and/or quant funds which exited the markets due to the financial crisis. What we therefore are seeing in the lower volumes are more "normal" trading volumes which we say pre-2005.

Still on volume, what we are also seeing is a bearish divergence with volume falling while prices rise. Is it possible that AAPL is ready for a fall?

Disclaimers
1. This article is not intended to provide investment advice and is an expression of my own opinion. Readers act upon this information at their own risk.