This can be dangerous for investors, when market sentiment is leaning so much in one direction—either bullish or bearish.
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New York, NY (PRWEB) November 01, 2012
In a recent Profit Confidential article, Sasha Cekerevac, financial expert and contributor to Profit Confidential, reports that with Apple’s latest high in its stock price, the Relative Strength Index (RSI) and the moving average convergence/divergence (MACD) indicator did not reach new highs, suggesting that market sentiment has topped out and the stock is on the verge of a pullback. However, Cekerevac notes that Apple’s move up in the summer to its September peak was on expectations of the new “iPhone 5.” According to Cekerevac, now that the product has been released, current market sentiment for Apple is overly bullish, as competitors of the once-clear leader among technology stocks are now beginning to outpace it.
“This can be dangerous for investors, when market sentiment is leaning so much in one direction—either bullish or bearish,” explains Cekerevac. “If everyone who wants to own the stock already does; then there’s no one left to buy it.”
As Cekerevac points out, many investors try to jump ahead of product announcements from technology stocks, hoping to profit from the upcoming publicity. He adds that investors are aware that sales of Apple’s iPhone generate a huge part of the company’s corporate earnings.
While Apple has a significant lead, Cekerevac believes that the competition has stepped up their game.
In the article “Don’t Trade Apple Until You Read This,” Cekerevac states that while other technology stocks have had to play catch-up with Apple’s innovative products, this iPhone represents the reverse.
Cekerevac believes that the market is getting to the point where the product offerings from technology stocks are so close that the phones are becoming a commodity.
He points out that “This also means that there is much more importance to every product offering from Apple, as any slip-up could give one of the other technology stocks the opportunity to take market share away from Apple.”
Cekerevac concludes that this divergence could indicate that market sentiment has topped out and the stock is on the verge of pulling back.
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