Apple

The premise of Apple stock is that a major new product is going to roll out in the next few months. The product has caught the attention of the mass market and is eagerly anticipated. What would you expect from the stock?

Let’s look at a chart of the stock back in the middle of April, before the launch date of the new product was firmed up.

As you can see there was a nice uptrend over the previous year or so. Some of this stock price increase has been because of the anticipation of new products and some has been on good earnings reports. Now let’s look at what happens when the launch date of this new product is announced and the time right up to about a week before the new product launch.

The stock runs up quite nicely as the launch date approaches. What market condition are we possibly looking at? The famous “Buy on rumor, sell on news” phenomena. As you might have guessed by now, the company is Apple Computer (AAPL) and the new product is the iPhone. Let’s look at one more chart, which shows the stock right up to the close on Friday.

As you can see, the stock has been moving sideways as the actual date approached, with a little bump up the last couple of days. Where does it go from here? There is one last piece of news that still needs to come out. That is the sales numbers for the first weekend, which should be out early next week. There may get another small bump up when those numbers come out, but that the stock will likely trend back down as many traders who positioned in before the launch start to take profits.