I'm always fascinated by these charts because, by definition, they totally ignore stock fundamentals and concentrate only on price/volume patterns. Even though the chart points to a lower price than the $450 or so at which AAPL shares now trade, there is an abundance of substantive data that would argue strongly against a continuing decline in the share price:
1. The forward looking price–earnings ratio is about 11 or less, which seems low for a company that is growing its net income closer to 15%.
2. Earnings per share are growing faster than net income because of aggressive share buy backs.
3. The features of the 5C and 5S iPhones, while disappointing to many (partly because of the price you have to pay), have some long term appeal. Especially the 5S, which is set up not just for better security but which lends itself to, for example, continuous monitoring of vital functions, sending the data to a hospital or clinic for analysis.
4. The ecosystem, which ties owners of Apple phones, tablets, and computers to a database and ownership of music, video, books, etc., which may not be easily transferable if the customer switches to non–Apple products. This is especially helpful in retaining customers and reinforces a strategy that, in the end, what makes money is not the hardware device but what you do with the device. Many investment firms analyzing Apple seem to forget that a big and growing part of Apple's profits comes from sale of music, video, books, and software -- all conveniently available to existing owners of Apple products.
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