Guest Post: The One Chart That Shows Where AAPL and the Market Are Heading

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

The One Chart That Shows Where AAPL and the Market Are Heading

Is Apple going to $1,000 per share and dragging the market higher with it?

Sometimes one chart tells us more than a thicket of charts. Every analyst and punter seeks an "edge" by plotting and comparing innumerable indicators, ratios, correlations and data points. Sometimes all this complexity pays dividends, but if it did so consistently then 90% of hedge funds and mutual funds wouldn't be underperforming index funds. Sometimes a single chart says it all.




Chart courtesy of the Macro Story.

Any questions?

Yes. Doesn't this mean that AAPL (Apple) is on its way to $1,000 per share based on iPad 3 sales, and with strong growth in GDP and corporate profits, the Dow Jones Industrials are going to 15,000 and the S&P 500 is heading for 1,500?

Answer: If that's what you see in this chart, then that's what the chart means to you.

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Mon, 03/05/2012 - 11:56 | 2223989 Cognitive Dissonance
Cognitive Dissonance's picture

Wow! That's one hell of a woodie there Jack.

You're gonna have one heck of a head rush from the returning blood flow when it all goes limp.

Mon, 03/05/2012 - 11:58 | 2224000 jcia
jcia's picture

Never underestimate the power of the iSheep

Mon, 03/05/2012 - 12:05 | 2224028 economics1996
economics1996's picture

Bubble.

Mon, 03/05/2012 - 12:08 | 2224034 dwdollar
dwdollar's picture

AAPL better be inventing iAntigravity to justify it's price. Anything less is going to be a disappointment I think.

Mon, 03/05/2012 - 12:15 | 2224055 Ahmeexnal
Ahmeexnal's picture

Charly Selim Saladin is going to go from riches to rags.

Mon, 03/05/2012 - 12:27 | 2224094 flacon
flacon's picture

If the central bank of Israel buys AAPL will this bauble ever pop? 

 

"bauble" = Roubini's pronounciation 

Mon, 03/05/2012 - 12:59 | 2224221 steve from virginia
steve from virginia's picture

"Bah-bul" Think 'bobble'. "Oops".

Faber has a good 'bahbul' too ...

It would be great to have a show where Roubini and Faber sit around for two minutes or so saying 'bahbul' over and over.

(Best investment analysis those two clowns would ever come up with, as well.)

Mon, 03/05/2012 - 15:38 | 2224959 malek
malek's picture

iTulips

Mon, 03/05/2012 - 12:38 | 2224108 Popo
Popo's picture

Never underestimate the power of Chinese manufacturing to throw a wrench into the machinery when one least expects it.  Its almost amazing that it hasn't happened to Apple yet.   Foxconn is hardly perfect.   Apple wriggled their way out of "antenna-gate", but really, they got lucky that the problem wasn't worse than it was.  And the "unlocked" issue when you buy your phone from a US telco (ie:  They're actually not unlocked) is just beginning to get traction.

But even if they don't hit manufacturing hiccups -- I fully expect Apple to cross the rubicon into bloatware on the iPad 3.   Anyone who's been paying attention has seen the iPad go from a VERY stable device to a buggy, bloated, and very crashy device in just 2 years. (My iPad Safari crashes several times a day now).  The problem is GETTING WORSE.  A simple read of iPad/iPhone message boards shows 1000's of complaints.   This is how most operating systems fall apart:  Manufacturers keep on throwing more shit at them until the system bogs down and becomes a power-hungry, slow, bloated, crashy beast.   The lag between pressing a key and seeing a character is now painfully noticeable.  No one wants to talk about it but when it comes to the iPad 3:  We are likely there already.

 

But none of this matters in the largest sense:  It's  Apple's television project that will be Apple's Waterloo.  They are getting ready to take on the biggest most entrenched players in the industry -- **ON MULTIPLE FRONTS** 

Apple is emboldened by their strikes against phone manufacturers.  To think that it will work the same way against television manufacturers, media companies and cable companies simultaneously would be foolish.  

I expect some rough reviews for the iPad 3.  And I fully expect the next generation of Apple products to arrive 3-5 years behind schedule due to competitive headwinds from cable and media.

I am not *at all* an Apple hater.   I own a Macbook Pro,  an iPad,  an iPhone and a Touch.  (My desktop is Linux).  But anyone long after one of the longest and most impressive bull runs in history is not only greedy,  they're a f'ing idiot.    There's lots to be concerned about.

 

 

 

Mon, 03/05/2012 - 12:42 | 2224148 shuckster
shuckster's picture

I've noticed the same thing - my iPhone - after downloading an update, deleted all my music. It's also much slower. I think they realize that shit's about to hit the fan and want to dump everything they can on the market before people wise up 

Mon, 03/05/2012 - 13:07 | 2224248 jose.six.pack
jose.six.pack's picture

+1 for using Linux

Mon, 03/05/2012 - 13:35 | 2224351 Ralph Spoilsport
Ralph Spoilsport's picture

What flavor? Linux Mint here.

Mon, 03/05/2012 - 14:05 | 2224482 Problem Is
Problem Is's picture

Plain ole vanilla Ubuntu...

Mon, 03/05/2012 - 13:10 | 2224261 Ralph Spoilsport
Ralph Spoilsport's picture

My iPad Safari crashes several times a day now.  The problem is GETTING WORSE.

 

Clear your Safari cache once in a while. It works for me on my iPad 1. Also clears up YouTube being balky on videos.

 


Mon, 03/05/2012 - 14:00 | 2224458 Problem Is
Problem Is's picture

You Mean Hand-Jobs Went MS Gates-ish?

"Anyone who's been paying attention has seen the iPad go from a VERY stable device to a buggy, bloated, and very crashy device in just 2 years."

"This is how most operating systems fall apart:  Manufacturers keep on throwing more shit at them until the system bogs down and becomes a power-hungry, slow, bloated, crashy beast."

"To think that it will work the same way against television manufacturers, media companies and cable companies simultaneously would be foolish."

+1... Informative analysis, there Popo...

Mon, 03/05/2012 - 15:29 | 2224896 rosiescenario
rosiescenario's picture

Companies like governments end up with entrenched departments that must continuously justify their existance and their need to grow and het higher pay. The software writers just keep writing, the engineers just keep layering on new bells and whistles, and eventually the law of large numbers enters the picture and overly complicated systems fail.

 

In general terms, this recognition has always been one of the strengths of Russian engineering, but I digress.

Mon, 03/05/2012 - 12:23 | 2224079 Mugatu
Mugatu's picture

I just downloaded the stock anti-gravity app for my iPad!  Fundamentals do not matter any more.  Its all about HFT's and government cheese.    

Mon, 03/05/2012 - 12:27 | 2224095 Spirit Of Truth
Spirit Of Truth's picture

Looks like some gravity hit. Anyone know why AAPL just had a mini flash crash?

http://finance.yahoo.com/q/bc?s=AAPL+Basic+Chart&t=1d

My guess is just gravity.

Mon, 03/05/2012 - 13:45 | 2224391 Head_Shots_Work
Head_Shots_Work's picture

You just HAD to go and say it didn't you! I'm guessing the thought police haven't visited lately?

Mon, 03/05/2012 - 12:08 | 2224035 SheepDog-One
SheepDog-One's picture

HEY no need for personal attacks here!

Mon, 03/05/2012 - 12:06 | 2224033 The Disappointed
The Disappointed's picture

Head rush nothing! He's gonna have a stroke!

Mon, 03/05/2012 - 12:25 | 2224087 LongSoupLine
LongSoupLine's picture

iNosebleed

Mon, 03/05/2012 - 11:57 | 2223991 LongBalls
LongBalls's picture

Even if this chart is wrong, which is doubtful; chasing stock prices rarely end well. Sometimes you must admit that you simply missed the boat and look for another. Goodbye AAPL. I'll see you when your back at port.

Mon, 03/05/2012 - 12:25 | 2224084 Comay Mierda
Comay Mierda's picture

AAPL = bump and run reversal pattern. you did miss the run up, but just in time for the iBubble to pop. time for shorts and medium term puts

Mon, 03/05/2012 - 11:57 | 2223993 LoneStarHog
LoneStarHog's picture

Nominal vs. Real

Mon, 03/05/2012 - 12:25 | 2224089 pupton
pupton's picture

Are you the same "LoneStarHog" from the Bullion Direct forum (who dropped from that scene a couple years ago)?  Why don't we see you on BD any more?

Mon, 03/05/2012 - 11:57 | 2223997 WonderDawg
WonderDawg's picture

So, it's a great time to go all in AAPL? What could go wrong?

Mon, 03/05/2012 - 12:00 | 2224004 Mercury
Mercury's picture

But if you connect the 10, 20, or 30 recent AAPL lows with a ruler and draw a line from left to right...

Mon, 03/05/2012 - 15:30 | 2224909 rosiescenario
rosiescenario's picture

.....don't use a ruler, get a set of French curves.....a ruler is just too analog.

Mon, 03/05/2012 - 11:59 | 2224006 Stoploss
Stoploss's picture

Gawd Damn, look at that.

Mon, 03/05/2012 - 12:00 | 2224010 SofaPapa
SofaPapa's picture

Beautiful charting!  Kudos.

Mon, 03/05/2012 - 12:00 | 2224013 Darkness
Darkness's picture

There are too many lines on this graph... Buy Gold. 

Mon, 03/05/2012 - 12:00 | 2224014 Rainman
Rainman's picture

The quants were teens smoking weed and guzzling Red Bull when the last bout of irrational QQQ exuberance was in full swing. So this time must be different.

Mon, 03/05/2012 - 12:01 | 2224019 The trend is yo...
The trend is your friend's picture

superimpose the nikkie from 1985, and the housing index from 1992 to the chart.  Apple longs keep arguing about their 100b in cash.  At last check msft also had roughly 90-95b in cash and they have a market cap of 270b, AND don;t have to worry as much about margin compression

Mon, 03/05/2012 - 12:08 | 2224020 Flounder
Flounder's picture

"But its different this time." - Thats what I heard when the only investment required in the late nineties was to buy DELL.

Mon, 03/05/2012 - 12:01 | 2224021 Everybodys All ...
Everybodys All American's picture

Sure ... and you will pay $100 for a loaf of bread if that chart plays out.

Mon, 03/05/2012 - 12:03 | 2224022 DormRoom
DormRoom's picture

Unless AAPL shifts into the search market (think Siri + search), its margin will eventually be squeezed by Samsung.

AAPL already dominates tech & retail.  Search is the only market big enough to justify a higher market cap.  If I were google, I'd watch out.  AI + voice + search could disrupt it.

Mon, 03/05/2012 - 12:08 | 2224037 williambanzai7
williambanzai7's picture

APPLs LT growth model is all about China. They dont have the content/censorship problems that Google and Facebook have, the latter two being effectively locked out.

As for margin pressure, the Chinese are obsessed with brand prestige and Samsung is just nowhere near APPL in terms of branding in Greater China.

APPL does not have a deal with China Mobile, but it will soon.

Their flagship store in HK is a constant mob scene.

Renes APPLcart

Mon, 03/05/2012 - 12:21 | 2224069 taniquetil
taniquetil's picture

As an Asian-American who has visited the Far-East in the last 5 years, I can confirm that brand obsession in the Far-East is mind-boggling-ly huge on a scale that you can't even imagine in the US.

 

Every amateur photographer buys a fucking Canon Eos + $500 lens without even knowing what an aperture is, and kids (who doubtless have no jobs because they are able to do so) line up for hours for new iProducts (and egg the store when they have to wait a couple hours for them). It not only makes you wonder where they get the money to do so but what the quality of life must be if they spend hours in line for basically the same iPhone they just bought 6 months ago.

 

Next time you see a crowd of Japanese/Chinese tourists in the States, count the total value of electronics they have on them. I guarantee you it tops 1-month's gross salary. And I guarantee you not a single one of those people knows anything about tech.

Mon, 03/05/2012 - 12:29 | 2224086 DormRoom
DormRoom's picture

it's likely due to extreme consumption signalling by males to compete for scarce weddable females in China.  From what I gather, if you have no $$ (or an apartment), you will never get a wife, or family.

 

That's a lot of pressure for men to be successful, or display success, to have the opportunity in mating selection.  All these extravagent conspicuous consumption is for females, and other men to back the f**ck off, cuz you have the big swinging dick.

 

Is it any wonder that the number 1 tv show in China is a dating show.

 

Mating selectivity also underpins the real estate bubble.  Chinese women tend not to marry men that don't have their own apartment.  And men with apartment are constantly seeking out single females.

Mon, 03/05/2012 - 12:33 | 2224116 prains
prains's picture

Dude the entire story for the last 10 000 years has ALL been about vag, including yours and mine. this is not a new phenomena, just layered in context, that's all.

Mon, 03/05/2012 - 14:04 | 2224475 VisualCSharp
VisualCSharp's picture

That is true, but the scale at which it's occurring at this point in history is ming-boggling. We're talking billions of people.

Mon, 03/05/2012 - 14:11 | 2224500 viahj
viahj's picture

just like most thing, scale matters.  sure, thoughout history, bling to get vag is the norm but this particular point in fiat-time, the sheer numbers of single males is remarkably way out of scale for most of history. 

 

edit: should have refreshed first, beat by minutes

Mon, 03/05/2012 - 15:14 | 2224798 smashmouth football
smashmouth football's picture

There's something else you have to keep in mind that is probably unprecedented in human history -- China has enforced a so-called "one child" policy for several decades.  This policy, combined with cultural norms favoring a male offspring, has resulted in an extreme male-female imbalance in their population.  There has been a lot of anecdotal evidence that Chinese parents, aided by modern medical technology which makes it possible to know the sex of a fetus early enough during gestation to abort safely, selectively abort females.  I forget where I read it, but IIRC there are something like 1.08 males per female among Chinese young adults.  That's tens of millions of angry, frustrated Chinese men who have no realistic prospect for mating or even recreational sex.  A recipe for social unrest on a massive scale.

Mon, 03/05/2012 - 18:11 | 2225891 Common_Cents22
Common_Cents22's picture

hookers, porn and blow up dolls should be a great export to China.

Tue, 03/06/2012 - 10:10 | 2227615 MrSteve
MrSteve's picture

Hookers could emigrate but you wouldn't want to "export" them. That would be wrong.

Tue, 03/06/2012 - 10:10 | 2227616 MrSteve
MrSteve's picture

Hookers could emigrate but you wouldn't want to "export" them. That would be wrong.

Tue, 03/06/2012 - 10:10 | 2227617 MrSteve
MrSteve's picture

Hookers could emigrate but you wouldn't want to "export" them. That would be wrong.

Mon, 03/05/2012 - 12:28 | 2224096 oldschool
oldschool's picture

Good point.  I'm curious though, given the rate of copyright infringement in China and environs, what are the prospects for Apple knock-offs there?

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