Investing can be about probabilities.
Often times I like to think of our model price charts as a probability machine. When the odds are in your favour you make a bet…investment. When the odds are not in your favour on a particular stock you move on to another situation. Simple.
With Apple rallying up to EBV+5 the probability of making money is…not so great. Again we are talking about probabilities here, not certainty.
Model Price Chart
Apple Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)
For those interested, a daily updated chart of AAPL subsequent to this post will be maintained on Facebook, here.
When to Purchase Apple Shares
Since January of this year there would have been two occasions where traders could have invested in Apple with good probabilities of success. Each time Apple shares traded at EBV+4, first in the third week of April and the second was the last week in June… as per my arrows on the above chart. (I know the price bar doesn’t look like it touched EBV+4 in the last week of June, but it was close. When Apple’s earnings were released on July 23rd, and we updated Apple’s actual balance sheet for the end of June resulting in the dip of EBV+4, as you can see in the chart above, from the last actual quarterly release from Apple at the end of March of this year.)
I have indicated with arrows the optimal purchase of Apple shares. The probability of success is greater when stocks are purchased at the bottom of the zone where the respective stock is trading than at the top of the zone. Why? Stocks usually trade freely within their respective zones – between EBV levels, as time goes on. Numerous stocks can trade in the same zone for years giving traders ample time for purchase and a higher probability of success at the bottom of the zone and selling the position at the top of the zone.
Will Apple Shares Have a Positive Transit of EBV+5?
I doubt it!
But we will have to see. Again I talk in probabilities NOT certainty. To me this is fun. When watching my quote screen, on the handful of stocks I follow, I know the EBV levels. The quotes mean something to me and over time they will mean something to you – if they don’t already.
As always we will see what happens!
P.S. As you can see from the chart Apple had a negative transit down through EBV+5 back in January of this year. I blogged about this at the time along with the importance of EBV+5 here, if interested.