The front page of the Wall Street Journal this morning has the following headline:
"Apple Pads Investor Wallets"
To the side of the article they show the chart on Apple's stock running through yesterday, when it crossed above 600 for the first time after announcing a dividend payment and share buyback program.
You can see Apple's steady and orderly rise from early 2009 to late 2011. Then over the past 3 months the chart has gone parabolic, surging from under 400 to over 600.
Has this ever happened before with a tech giant? Yes, the following chart provides the track that Google followed during its multi-year run up to November 2007 against Apple's current move. Their paths are almost identical.
Google also experienced a "blow off top" during the final stages of its run. It is during this type of move that you want to have your pen and paper ready to write down quotes coming from the media and Wall Street analysts on where the stock is going.
I remember Jim Cramer discussing Google 800....900.....1,000?.....during the run in late 2007. The analysts are falling all over themselves to top estimates on where Apple's price could be heading.
Apple, in terms of company size (due to the surge in the share price), is now larger than the entire retail sector - every company!
Apple is a great company and so is Google. These are not Pets.com companies with no earnings from back in the early 2000's. Can Apple run to 800......900.......1000?......like investors believe who are pouring the stock into their portfolio? Sure it can.
I was playing a poker tournament last night (for charity of course) and my table began discussing Apple stock during one of the breaks. "How many shares of Apple traded and where did it end the day?" Then they moved on to Bank of America (I live in Charlotte, home to Bank of America), and one player said he could see the stock falling back to 9 (it has recently doubled from 5 to 10) but sees that as the absolute low. One said he heard that guy from Texas (Warren Buffet who is from Omaha, Nebraska) was buying so it had to be strong.
I had no comment on the matter. I preferred to listen and learn about the mood of the average investor thinking about and discussing their portfolios. As I discussed in detail over the weekend in the Global Market Forecast, sentiment is current running at extreme highs.
How do the charts for Apple and Bank of America look to me? Extremely dangerous.
h/t Wall Street Journal, Zero Hedge, The Big Picture