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Tiger Investment Software's
Research Newletter 
William Schmidt, Ph.D. (Columbia University)
2/14/2005
PO Box 9491 
San Diego, CA 92169
(858-571-3115)
Tiger Software's Analytical Tools Applied To Individual Stocks    
APPL (Apple Computer) 84.63 +3.42.
(C) 2005 William Schmidt
This letter focuses on AAPL (Apple Computer) at current prices as both an investment and a trade using TigerSoft's many technical tools. This newsletter will help you see the power of TigerSoft and serve as a learning tool for those evaluating other stocks.

TigerSoft's unique "POWER RANKING" Concept

There are about 12 different factors to consider when evaluating a stock. But you can compress most of these into one single value. That value is the "Tiger Power Ranking".  The universe should be at least several hundred typical stocks. TigerSoft gives AAPL a Power Ranking that places it in the 96th percentile of stocks assessed in its universe. That places it among the top 10-15 most bullish stocks in the 450 stocks looked at for this study.  

 
Tiger Weekly Charts

Next look at a long-term weekly Tiger chart. This shows you likely support and resistance levels that may not be apparent from looking at even a year's chart.  In this chart, you can see that AAPL has moved to a new high above all peaks for the last five years.  It  is quite bullish, that the stock has quickly and easily  moved up past the resistance posed by the 2000 peak near 75.

After making a strategic assessment from the weekly chart, concentrate on the details that TigerSoft's yearly charts reveal about the momentum and internal strength of your stock. To make a thorough evaluation, we review about a dozen  factors or indicators:  

1. Peerless DJI Major Signal.
2. Long-Term Chart
3. Momentum: Key Moving Averages.
4. Price Patterns
5. Accumulation or Distribution
6. OBV-Aggressive Buying or Selling
7. Relative Strength
8. Current Buy or Sell Signal
9. Status of Automatic Signals
10. How Stock Topped out in last Bull Market.
11. Opening Power vs. Closing Power.
12. Synchronicity vs Asynchronicity Indicators

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Future Newsletters will take up other stocks in the news or that pop up from the Tiger screening of 7000 stocks.  Your comments and ideas are always welcome.

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 12 FACTORS USED IN EVALUATION APPLE'S STOCK

1. Begin by evaluating the general market's outlook as viewed through the perspective of Peerless Stock Market Timing. Place the Peerless Buy and Sell signals on the DJI's chart using the Trading Range mode.   The current chart of the Peerless DJIA shows that the last red major signal was a Buy B15, that there was a minor Buy B11 at the bottom a few weeks ago, and that a new minor Sell S13 has just appeared. The HELP routines (and our Hotline) make sense of these signals. The red major Buy B15's past success'es statistics should be looked up in the software. They show that B15s are profitably reversed by a major red Sell signal 93.3% of the time and that the average DJI gain is 9.6% when this occurs. This presents a DJI target of 11,700, and the DJI is now only at 10723. Sell S13 signals are considered minor sells. The average decline at the time of the next Buy signal is only a little more than 1.06%, and their reliability is only a little more than 50%. All in all, a shallow pullback by the DJI is the most that is expected over the next two weeks.  After that higher prices are expected.  That market strength should allow AAPL to move higher.

2. Continue to evaluate APPL with its long-term price chart.  This can be obtained by going to a free internet service - www.bigcharts.com, and looking at a chart showing the stock over as much time as they have.  AAPL's chart below covers 25 years.  You will want to start by drawing trendlines the through a series of at least three tops to see the Resistance Lines and at least three bottoms to see the Support Lines.  APPL's chart shows its stock is on its fifth swing upward to all-time highs since it was founded.  A resistance line can be drawn through these highs.  It now crosses at about 90.  The long-term chart shows a series of spirited rises and faster declines.  In 1999, APPL ran up sharply from 20 to 74 and then fell back even more rapidly.  90 represents a reasonable trading target.  After it reaches that, we should be ready to quickly take nice profits.

3. Momentum: Now turn to AAPL's daily TigerSoft chart (dated 2/14/2005).  
The stock is above all its moving averages. This is bullish.    But note also that the current price is far above its blue 50-day moving average and much farther above its black 200-day moving average and its purple 30-week moving average.  By any measure, the stock is far above longer term support.  If confidence should somehow be shaken in the stock, it would have a long way down to the next support level. 

A big decline is not expected.  But a minor 3%-5% DJI retreat is quite possible.   That would be in keeping with seasonal February weakness, the DJI's overhead resistance at 10900-11000 and the Peerless Sell S13.   APPL's rising 50-day moving average is the most likely support if there is a general market decline of 4%-6%.  

4.  Price Patterns:  APPL has just made a red breakout above resistance.  It has surged past a logical place to take profits.  It should go higher.  The red bar means the action took place on high volume.  You can see that other earlier breakouts took place with red high volume.

5. APPL's stock showed earlier high big-money Accumulation last Fall.  Insiders knew that the stock was about to go up sharply on bullish news, IPOD sales and music downloading.  It has recently absorbed the usual profit-taking after such a steep rise, and the Tiger Accumulation Index has turned positive again.   So long as it stays positive, it will be a sign that the profit-taking is not outweighing the new aggressive buying that such a strong uptrend often brings in among short-term traders.

6. AAPL's OBV Line is important to watch now. The OBV Line is the black line that is rising in zig-zag fashion underneath the price chart.  A rising OBV Line means that the stock has higher volume on up days than down days.  This is a somewhat crude tool.  With a high-capitalization fast mover like APPL, it is important that the OBV Line confirms new highs made by the stock with highs of its own.  OBV Non-confirmations would be a definite warning sign. Aggressive buying is needed to eat up the inevitable profit-taking.

7. Relative Strength:  TigerSoft considers, among other things, how the stock does relative to other stocks or an index such as the DJI.  The ITRS Indicator stands at a +.28.  This is quite bullish, but it should be noted that the ITRS indicator has been in a downtrend since December.  You will also see a note on the chart that the Short- Term Relative Strength is now in a condition of short-term bullishness.

8. Current Buy or Sell Signals... Users will see that the TigerSoft first presents the APPL chart with an OBV 21-day moving average.   The top line, however,  shows the best trading system for APPL over the past 12 months is based on OBV penetrations of its 50-day moving average.  Place this on your screen and watch it closely.  It has gained over +221% for APPL this past year, even allowing $40 per trade for commissions.   The top system will remain on a Buy until APPL's OBV Line penetrates below its 50-day moving average.  

9. With one command, TigerSoft permits you test more than 50 trading systems to see whether they are on Buys or Sells. As you can see from its chart, the four best are all on Buys.   That also gives us confidence with the stock.  You may also want to place on the screen the automatic signals that correspond to a stock that is in a strong uptrend.  The Help Routines give the details.  A simple rule, however, to follow for such a strong stock: abide by the 50-day moving average.  As long as the stock does not close below it, let the stock run.

10. Do a little homework and see what the technical condition of AAPL was at its previous major top in early 2000 using TigerSoft.  What emerges is that APPL topped out in 2000 on March 24th, at the upper band.  Soon afterward, its OBV-Line violated its 50-day OBV moving average, gave an automatic Sell signal, and formed a bearish head and shoulders top pattern.  In addition, in March 2000, Peerless gave a major Sell S9.

11. Another short-term very bullish indication comes from TigerSoft's unique "Opening Power" and "Closing Power" tools.  It is relatively rare for both to be rising as they are now, and that is bullish.  A related indicator - the "Tiger Day Traders' Tool" - is also rising and bullish.  Tiger users can see an explanation of the indicators unique to Tiger in the software's Help routine.

12. The same can be said for the fact that both the "Synchronicity" and "Asyncroncity" trends are strongly up. Tiger users can see an explanation of this concept and its working indicators in the Help routine.

(C) 2005 - William Schmidt, Ph.D. ---- All right reserved.  All repoduction of these materials may only be done with written permission from the author.