Has AAPL peaked?

I was day-trading GOOG around 2007 when it went parabolic and then fell like a rock. A warning shot for what happened to the market in 2008. Been playing with AAPL in a  similar way, and just saw it go parabolic. Is history repeating? First the collapse of AAPL and then the whole market? Check this chart out from Doug Kass:

I have seen a lot of commentary on this chart. "This time it is different!"  GOOG was at a 50 PE while AAPL has drifted to a PE that is the same as the whole S&P (which makes sense given its market cap size - "regression to the mean" - It IS the mean now!). AAPL is still growing fast and has continued dominance of its sectors. Etc.

Stock predictions range from a low of $450 to a high of $750, with whisper at $1000, which would value AAPL at close to $1T. 

Now, I am an Apple fanboy, and use my iPad and iPhone 4S constantly, eshewing my Android phone (Google Nexus - you get it, prior Google fanboy untll the stock popped), hardily touching my Windows netbook, and sitting in front of an iMac dreaming of a Macbook Air with a touch screen. But I am buying a stock, not a company.

That stock has produced. Looking back, it got to as low as $3.18 in 1997-8, whle generally hovering below $5. Bill Gates bailed out Apple for $150M back then. if Microsoft had held that stake, it would be worth over 100x - over $15B. Microsoft also bought into Facebook in 2008, and that stake will be worth a lot too, but the AAPL return is truly outstanding.

Parabolc runs always end badly, typically with a fall off a cliff shape. When GOOG fell, it had the expected bounce (wave 2) and then fell hard - look at the chart. But parabolic runs have no clear rules. AAPL may keep running. There are a bunch of stock market aphorisms around this, including don't get in front of a moving freight train.  

One way to figure this out is to use techncial analysis. Here is a wave chart on AAPL, which says the recent tick at $600 could very well be the end:

Comments

[Virgil]

I know there has been a lot of concern about Jobs passing and what this means for the future. I have to admit I wasn't as impressed by him. He undoubtably influenced their culture. Can they still put out product without him? For your consideration:

I'm not an Apple fanboy nor am I optimistic about the overall markets prospects.
However, I love Apple's design philosophy

http://www.youtube.com/watch?feature=player_embedded&v=ahtHKCQUD2k

I have a feeling they will do just fine.

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Doug Kass is not to be trusted. I do consider his bottom calls (occasionally), but not his top calls.

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Clearly Apple is in a third wave.
The StochRSI gives decent signals when it crosses the midline. Its MA's give confirmation and a cross gives an early tipoff of a possible trend change.

Maybe it can turn on a dime from here. Maybe we get a black swan that changes the whole ballgame. I don't see it in this chart.
There just isn't anything there yet to justify calling a top.

[Ashish]

Very timely article Duncan.. i was thinking of shorting AAPL this weekend.