ebook essays pieces of the puzzle
Tuesday, April 16th, 2013
trend lines

13 0416 zAAPL trend line

An item in the March 19 edition of the Wall Street Journal was titled, “For Apple Investors, a Line is Broken.”  The graph that accompanied it was essentially the top panel of the chart above, showing the stock price and the trend line of its decline.  (For some reason, a low-quality version is used in the online story.  The vertical line in the chart above shows the close prior to the article.)

It’s been a time of trend lines.  Mostly ones slanted up, given that lots of U.S. stocks have been heading higher of late (yesterday notwithstanding).  And the blogosphere has been dominated by trend-following advice, as it is during market advances.

I also saw it as something of a trend that the Apple story and chart appeared in the Journal, because mainstream publications haven’t historically published trend line charts of this sort.  (There are, it seems, vogue traders everywhere.)

The chart above starts last April 26, the day I published a piece about distortions in investment process that occur when there’s an elephant in the market room like Apple.  It charged ahead into September, but beat the market at a much more muted rate than it had been doing (shown in the lower panel).  Beginning to end, it’s an ugly picture; the stock underperformed by over 38%.

Since the downtrend in the stock was broken, it has fallen further on an absolute basis — and relative to the market — although it’s only been four weeks.  We’ll see how good this simple signal looks in a few months.  (Chart:  Bloomberg terminal.)

out of the woods

When I last saw Adam Scott in person, he was out of sorts and out of position.

I was taking photographs at the PGA Championship in 2009 and he had just hit one of the worst shots I’d ever seen by a professional golfer.  In the fairway at the famous 16th hole at Hazeltine, he bent over in pain — not physical pain but mental pain.  He couldn’t putt and his famously pretty swing had left him too.  He shot 82-79 to miss the cut by miles.  I remember telling someone, “He can’t play a lick.”

On Sunday he won the Masters.  Remember that the next time you get in a slump.