I believe it's time to short Apple Computer (symbol AAPL). Close out any position if the price crosses above $73.
Below is a chart of Apple's entire trading history since their 1981 IPO (adjusted for splits, of course). I have highlighted in green five discrete "hyperbolic rallies", the most recent of which is the most dramatic and peaked last January 12th.
I'm not an Apple-basher, by the way. I bought my first Macintosh early in 1984, shortly after it was introduced. I worked at Apple for nearly three years in the late 1980s. And Steve Jobs has been my personal hero since I was a kid. So Apple is a great company with wonderful and well-polished products.
But their stock is atmospheric at this point. I would characterize the five tinted "hyper-rallies" as follows:
- 1982-1983 - General high-tech rally; anticipation of Lisa & Macintosh
- 1986-1987 - Post-Jobs ouster recovery and popularity of Mac as desktop publishing tool
- 1990-1991 - Post-Kuwait tech rally and popularity of faster Macs, such as the IIfx (Multimedia)
- 1998-1999 - Jobs influence on product line improves earnings and reputation
- 2004-2005 - iPod rally, earnings momentum
Taking a closer look at recent history, you can see the Fibonacci retracement closely aligns to the price behavior. Indeed, today the 50% retracement was nailed to the penny. I'd say this is a relatively safe high reward/low risk trade.