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AAPL Range Analysis: Technicals and News Update 11.19.2012

The pullback, since hitting $700, has lasted 39 trading days, more than any other pullback of late. The length of time the bears have been in control is unusual by AAPL standards, but also the range is unusual. The average range of this pullback is $15.67. Traders on Friday saw a massive range. As indicated before, AAPL had a range (high to low) of $24.25 or 4.59%. This is outside 1.5 standard deviations of the mean. Meaning that 83.6% of the observations were below this. In addition to this, the volume on Friday was massive. 43 million shares traded hands. The last time AAPL traded that much volume was on 3/13/12’s ‘gap and go.’ While these are interesting quantitative observations, qualitative observations are important too in stock analysis.

Given the unusual nature of Friday’s action, a short-term bottom could have been built. Volume may indicate a ‘wash out’ and the price action could be confirming given the massive hanging man. The other side of this trade is clear however. AAPL has dominated for a long time now. They were formerly the underdog, but now they are the firm to beat.

A massive trend line connecting AAPL’s bottom to the flash crash low and finally touching the 6/20/11 bottom, sits only $50 away from Friday’s low. Given the $20 at the money weekly straddle, this is not out of the question in the short term if the market takes a dive.

In related news AAPL is expected to produce a slick flat screen LCD or LED HDTV by next year. Perhaps one can expect it to look similar to the new iMac given that skinny design.

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mark@keeneonthemarket.com

MarkAAPL

 

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ABT May Cure Your Portfolio (Part 2) 11.16.2012

ABT’s dividend has always been an important part of Abbott’s investment identity. According to management, ABT expects that the combined dividend of the 2 companies will be at least equal to Abbott’s pre-separation annual dividend. And they went on to say that AbbVie will be even more focused on shareholder returns in the form of dividends, paying a larger portion of the dividend.

With the former in mind, ABT announced that they expect AbbVie to pay an annual dividend of $1.60 per share, starting with a quarterly dividend to be paid in February. Management also announced that they expected the new Abbott dividend to be $0.56 per share. This new rate will be in line with its peer group and growth prospects. The combined annual dividend rate of $2.16 for the 2 companies exceeds the current annual dividend rate of $2.04. And this increase is expected to be implemented 1 quarter earlier than in past years…just another way this deal is benefitting shareholders.

Away from the fundamentals for a moment, the options market is implying a $4.00 move either way by Jan 2013; this expirations cycle is past the date of this corporate event, but it is till relevant. This will be an interesting stock to watch, not only because it has recently tested its 200 day moving average, but also because investors have clearly liked the idea of the firm splitting up. Shares are up over 20% since the announcement, but market risks like the fiscal cliff may present an opportunity to get into ABT on the cheap; if one is compelled to do so.  More to come on this story.

Screen shot 2012-11-16 at 8.14.19 AM

Part 1 here

http://www.keeneonthemarket.com/blog/1611-abt-may-cure-your-portfolio-part-1-11-14-12

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mark@keeneonthemarket.com