Apple has scheduled a product-announcement event for tomorrow. My expectations are that the products announced will be mostly evolutionary, but there is a dark horse that can change the game for tablet computing. The dark horse is a 13-inch iPad that is a replacement for full-fledged laptops. If this dark horse appears, the technical setup in Apple stock is such that the stock can easily rocket to $600 and beyond.
Let us start by looking at an annotated chart of Apple AAPL.
Please click here for annotated chart of Apple.
This morning, Apple stock has moved into the resistance zone of $510 to $530. This resistance zone exists because when Apple stock was falling from its high of about $700 to under $400, a very significant amount of buying took place in this zone. It is a common investor behavior to hold on to a stock as it falls, but then sell it when it rises to their breakeven point.
When a stock rises, it typically takes more than one attempt to break out of a resistance zone. In my backtesting, stocks with good fundamentals such as Apple tend to break out on the third or fourth attempt. The reason is that by this time anyone who wants to sell has already sold. During the summer there were two attempts to break out of the resistance zone. Both attempts failed.
My expectation is that Apple will announce a new iPad mini with a Retina screen to make it competitive with Google GOOG Android tablets. Also Apple is likely to announce a thinner iPad with the same processor that is used in the iPhone 5S….Read more at MarketWatch
