AAPL shredded its way past two imposing Hidden Pivots with such ease on Friday that there can be little doubt it will reach the 537.23 target shown in the chart. This seems likely to occur before the stock splits 4-to-1 next Monday, yielding a 134.30 price at the target. The split is meaningless technically, but it has a reason that holds very significant implications for Apple shareholders. The sole purpose of the split is to broaden the ownership base so that the fat cats who have owned the stock since it was trading for under $100 can quietly distribute it to a million greater fools who implicitly believe the company is worth $2 trillion. At $134 a share, acrophobia will no longer be a factor, nor will the sense of foreboding that investors sometimes get when a stock has run up as spectacularly as AAPL has.
The pattern shown is all but guaranteed to work for ‘mechanical’ entries, assuming there is a pullback sufficient to get us aboard. I doubt this will occur, at least on the hourly chart, but all trades should be initiated with a bullish bias that assumes nothing can prevent the stock from reaching 537.23. I’ve implied this could take a week, but at the rate things are going, the target could be hit as early as Monday. If so, we should see a pop above the pink line (p2=512.03) Sunday night. This is shades of ‘Radio,’ circa 1929 and it is not going to end well. It will take a while, however — many months, perhaps — for DaBoyz to distribute perhaps $1 trillion of stock to the rubes before reality sets in. The fact that much of the distribution will occur at levels equivalent to a ridiculous 537.23 is a tribute to the evil genius that underlies virtually all trading in the securities world. It is one big con game, and in dollar terms this will be the biggest con of them all. ______ UPDATE (Aug 24, 6:20 p.m. ET): The stock gapped up $17 on the opening bar, squeezing bears into oblivion. However, even with their buying power significantly reduced as a result, the stock still ended the day with a $7 gain. Now, a pullback to p=486.83 would trip a ‘mechanical’ buy, stop 470.03. _______ UPDATE Aug 25, 6:03 p.m): AAPL was a conspicuous laggard in the lunatic sector today. Not to worry, since this is how the portfolio geniuses rotate money to get more bang for Other People’s buck. It takes a lot of OPM to keep a $2 trillion dollar gas-bag a-wafting, but today’s maneuvering will pave the way for AAPL to keep rising, light and frisky as the Hindenburg. I have slightly adjusted the target to 537.50. A pullback to p=486.97 today would trigger a ‘mechanical’ buy, stop 470.12. If you use options, go with Sep 11 calls at a strike priced between 1.00 and 2.00, and don’t over do it, since this is speculative. _______ UPDATE (Aug 26, 5:39 p.m.): The mechanical trade suggested above remains valid, although we’re unable to see the $20 pullback required to trigger it occur in a single day. _______ UPDATE (Aug 27, 10:03 p.m.): Initiate the trade only if the stock falls to p=486.97 between 9:30 a.m. and 10:15 a.m. Otherwise, it would be unnecessarily risky to get stuck with a position over the weekend.