Underdog Of The Three Amigos

12/07/12 08:18:27 AM

by Matt Blackman

As other market leaders have recovered, Apple is struggling.

Security: AAPL, AMZN, GOOG
Position: N/A

In my last Traders.com Advantage article, we looked at how Apple Inc. (AAPL) looked to be struggling. In Figure 1, you'll see more evidence when you compare it to two other high-flying market leaders.

As you can see, market leaders Google (GOOG) and Amazon (AMZN) have been recovering nicely since their mid-November lows. Apple did too, at least for a while. But if it's still a market leader, what is it trying to tell us?

FIGURE 1: GOOG VS. AMZN. VS. AAPL. Here's a daily chart comparing the performance of Google, Amazon, and Apple over the last six months.

Graphic provided by: TC2000.com.

As Figure 2 shows, technology has historically been strong into July, dropping to mid-October then rallying strongly into December. Clearly, that low came a month late this year and both AMZN and GOOG have rebounded strongly from their lows. Meanwhile, AAPL has been dogging it.

One warning can be seen in the potential head & shoulders pattern that was discussed last time. Whether it comes to fruition remains to be seen, but clearly, it seems to be having a hard time keeping up with the Joneses in its industry.

FIGURE 2: TECHNICAL SECTOR SEASONALITY. Composite chart of the last 20 years of annual performance in the technology sector shows typical periods of strength and weakness.

Graphic provided by: www.equityclock.com.

On the other hand, after breaking back above its 200-day moving average, GOOG has just broken through another level of resistance, which is now support over the last 10 trading days since November 16. AMZN has made an even stronger recovery since then.

If this were a horse race, AAPL has a long way to go to catch these leaders, and trading the leaders is what it's all about. The next trick will be in knowing when the rally is over, to take some profits, and wait for the next run.

Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. He is the host of TradeSystemGuru.com. Matt has earned the Chartered Market Technician (CMT) designation. Find out what stocks and futures Matt is watching on Twitter at www.twitter.com/RatioTrade

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Underdog Of The Three Amigos

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