Johnny-come-latelies in Apple (AAPL) stock may be setting themselves up to get their pockets picked by professionals.
Unless one has been hiding under a rock, it has been impossible to hide from the constant bombardment of the same tired news that iPad 3 is coming.
Professionals and individual investors play the much anticipated event very differently.
Professional traders marked on their calendars on March 2, 2011 to start accumulating Apple stock in early January, 2012 subject to overall market conditions. What was so special about March 2, 2011? This was the day when iPad 2 was introduced. Based on past patterns, it was reasonable to assume that Apple will introduce iPad 3 in early March, 2012.
A simple analysis of the recent data shows that Apple stock gains about 1.7% leading into an announcement and then falls about 1.3% in the three week period after the event.
The basic plan is simple, but execution is usually difficult because markets seldom repeat exactly. There are always a number of other dynamic and sometimes very volatile variables. The data set is also small and has large standard deviation.
The run up in Apple stock into iPad 3 is much larger than previous events. The reason is there are lots more Johnny-come-latelies in the stock. This can unfold into a dream scenario for professionals.
Readers will find looking at the following dates on an Apple stock chart that also has a PowerShares QQQ Trust, Series 1 (QQQ) instructive:
Oct. 4, 2011: Apple unveils the iPhone 4S….Read more at Forbes
