Apple's Loss Has Very Little To Do With Jobs' Health
Thursday, January 15, 2009 CANSLIM.net
Apple Inc (AAPL -$1.95 or -2.29% to $83.38) gapped down today and fell on heavy volume while many pundits were focusing on the headlines surrounding CEO Steve Jobs' medical leave of absence. However, the action in AAPL has been notably unhealthy for many months while it has been trading under its 50 & 200-day moving average lines. Decelerating sales and earnings increases are a concern, however it has continued to put up better than +25% increases which still meet the minimum increase required in the investment system's guidelines. It closed the session -56.6% off its 52-week high, and it has struggled while trading as much as -17.93% lower since its last appearance in this section under the headline "Apple Fell -50% Since Removed From Featured Stocks List" (read here).
AAPL faces a tremendous amount of resistance due to overhead supply, which makes the stock unlikely to be a market leader in the near term. It failed to trigger a fresh technical buy signal and the major averages began a correction shortly after AAPL was featured in the June 2008 issue of CANSLIM.net News (read here). Based on weak technical action it was dropped from the Featured Stocks list on June 27, 2008 when it pulled back near its 200-day moving average line, as it was then observed - "It has been repeatedly noted that no volume conviction was behind its recent gains. Color code was changed to green after recent deterioration pressured it from its highs. Signs of weakness, especially due to poor market conditions, make it a less compelling buy candidate. Concerns were raised by recent distributional pressure and noted several times since it was featured" (read here). AAPL was first featured in yellow at $46.82 with an annotated graph on Wednesday, August 24, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here).
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In recent weeks we have taken the opportunity to use this section to revisit some of the previously featured stocks that were dropped some time ago based on technical and fundamental weakness. Studying what happened afterwards should hopefully allow investors to get a better understanding of the importance of having a sell discipline. If you are a new investor, or simply forgot how ugly the last Bear Market was for most stocks; the current Bear Market is offering everyone another lesson on how it works. Those who might otherwise still be tempted to say, "But its a good company", and hold a losing stock after it falls more than 7-8% from their buy price have an opportunity to learn why limiting losses while they are small is so important. These well-known, high-profile companies serve now as perfect examples that will hopefully allow investors in the future to recognize the warning signs and technical sell signals so they will know when it is time to lock in profits or minimize losses per the investment system's sell rules.
Is there a previously featured stock you would like to see revisted in this section? Members are welcome and encouraged to write in and request that we take another detailed look at any of CANSLIM.net's previously featured stocks (click here).
Through the daily market commentaries provided at CANSLIM.net, we believe there has been a very clear message communicated to investors concerning the M criteria. Hopefully, you got it! If so, you reduced exposure and avoided being set back badly, saving yourself more than enough to justify the cost of your membership.
The good news for all of us is that another bull market will eventually begin, offering us the opportunity to do an even better job of following the investment system's guidelines and generate above average returns. During the first few months of a new bull market, members who continue reading the daily CANSLIM.net reports will notice the next crop of market leaders capable of producing the greatest gains. The most important thing to do, for the time being, is stay out of harm's way, preserving your capital and your confidence. We welcome your praise, criticism, suggestions, or feedback in general (simply click here) about the job we are doing.
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