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Apple Inc.’s (AAPL) Stock Has Just Bottomed

natural gas-bottomBillionairesPortfolio.com: Anyone who has read my blog knows that I  have been a huge bear on Apple Inc. (NASDAQ:AAPL), because I knew that many of the biggest mutual funds and hedge funds were dumping this stock over the last 3 months.

Yet I never mentioned the fundamentals of Apple, which everyone already knows how they have the best balance sheet in the world, a great dividend that’s higher than the 10 year treasury and growing, and now a perfect technical trading setup on the chart.

See I am an opportunist, I might have hated Apple over the last 3 months, but that does not mean I am not always looking at the stock every week to see if there are any signs of a bullish reversal.


Apple is starting to form an incredibly bullish pattern called an Inverse Head and Shoulders Pattern. Almost everyone knows what a Head and Shoulders Pattern is. It is probably the most common technical analysis pattern in trading. An Inverse Head and Shoulders pattern is an extremely bullish reversal pattern, it occurs when a stock forms a bottom by printing a series of 3 lows. Whats important about this pattern is volume. Volume must be heavy on the lowest low, because that signals a wash out- and exhaustion in selling, where are the sellers have sold their position and this is exactly what has occurred in Apple’s stock.

Just look at the Chart below:

appl chart

The second reason I think Apple has bottomed is that there is a catalyst which will propel this stock back up to  the $545 area, which would be a 25% move from Apple’s current share price of $433.

Here is the catalyst, Tim Cook the CEO of Apple, for the first time has come out and lobbied for Apple verbally in the public domain. This is a sign of leadership major hedge funds have been waiting for. Mr. Cook is going to congress to try and work with the US Government on repatriating the billions of dollars that Apple has overseas back into the US at a lower tax rate. I think the US Government will work with Apple and Mr. Cook on this. Why? Mr. Cook has said Apple is a huge taxpayer already and a huge employer of US Citizens, so they have a lot of power to negotiate and therefore I believe Apple and the US government will cut a deal on this offshore money.

Why is this bullish for the stock? The cash issue hurt the stock as market players (hedge funds, mutual funds) hate uncertainty.  These big  funds like to bet on sure things, and the reason they have not been buying Apple recently is the uncertainty over Apple’s offshore cash hoard. Now that this issue is coming to the forefront with Tim Cook going to congress to discuss this, the cloud of uncertainty will start to disappear. When you combine that catalyst with the bullish Inverse Head and Shoulders Chart Pattern, it means Apple has bottomed. Let me repeat that I am calling a major bottom in Apple today.

Just remember who told you this, remember three months from now how I was the only one who was telling you to sell Apple over the last 3 months, and now I am the only one calling the bottom in Apple.

Learn more about me and how we follow Billionaire Investors into stocks by visiting the Billionaires Portfolio.

-Written By William Meade Editor of The Billionaires Portfolio

Related ETF: Technology Select Sector SPDR (NYSEARCA:XLK)

Top 10 Holdings (62.38% of Total Assets) as of 4/22/13
Company Symbol % Assets
Apple Inc. AAPL 14.02
International Business Machines IBM 7.54
Microsoft Corporation MSFT 7.28
Google Inc. GOOG 7.15
AT&T Inc. T 6.80
Verizon Communications Inc. Com VZ 4.77
Oracle Corporation ORCL 4.05
QUALCOMM Incorporated QCOM 3.90
Cisco Systems, Inc. CSCO 3.76
Intel Corporation INTC 3.11


NYSE:XLK


 

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  1. mds
    May 19th, 2013 at 09:28 | #1

    The object of the crooks and press cohorts was to bottom the stock before WWDC. They know whatever they can steal at a deep discount will pay off in spades. If you have skin in the game; don’t sell it all on the rise; because they will do this again; after which it will go back to $700 + (But certainly take some profit and then use it to play with house money)
    @RSJ

  2. RSJ
    May 19th, 2013 at 01:04 | #2

    Fantastic analysis, couldn’t agree more!

    I think Google I/O was the end of the anti-Apple press screed that has been going on over the last 6 months. The ramp up to WWDC can’t hurt their stock price!

  3. Allen Mattson
    May 18th, 2013 at 23:59 | #3

    Technicals confirm as the stock reaches new lows, the MACD trends upward. Solid time to get some skin in the game. Thanks for sharing.

    -Allen

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