A long-term perspective; looking at Apple's charts

Back in December of 2011 I recall thinking that Apple seemed to be getting overextended. The 'Star' algorithm indicated that the trend that started in 2009 was going to pause. But then for most of 2012 I thought it had been wrong. On the monthly chart below I drew a horizontal line to show where I thought Apple was going to be range bound:

I still can't explain the behaviour of this stock, as it seems to have drawn a rough head and shoulders formation on the weekly chart from January 1st 2012, to January 25th, 2013. Although the right shoulder seems to be cut short. In any event the net effect is that the stock seems to be pulled back to the red horizontal line.

The fundamentals on the company (this is what's most important long-term) look good, but with so many trendy individuals, hedge funds, and sovereign investment funds interested in the company I'd rather stay out of that night club until it's less crowded.

Is Volatility About to Spike?

Members that track the VIX, VXX or VXD will have noticed the descending wedge formation. You will also have noticed the star cluster that is forming on the daily charts. This should be interpreted as a cautious signal. On the plus side LQD is very strong and various dollar signals don't tell of a reversal at this time. Until there's a change with UUP and LQD any volatility spike should be muted.

Is The Sun Going to Rise on Solar?

Is the multi-year drag on solar energy stocks over? That is the question being posed on ChartsAndSignals.com by one of our contributors. Many of the PV manufacturer stocks are near all time lows after years of relentless declines. Its almost as if the whole industry was going out of business.

But looking at the earnings of some of the companies we see that they are making money. Better than that, the price/earnings ratios look very attractive, assuming the earnings are real. Just today there was a big win with the Topaz Solar Farm, a $2 billion, 550 megawatt project. This is a big project with a planned output enough to supply energy to 160,000 homes, located in San Luis Obispo County, California. The investor is MidAmerican Energy Holdings, controlled by Berkshire Hathaway.

Here's a list of solar stocks worth watching*: FirstSolar (FSLR), SunTech (STP), Trina Solar (TSL), Yingli (YGE), ReneSola (SOL), JA Solar (JASO).

*Not a recommendation, just a list to research more on.

This morning there's good news from Europe. France and Germany have agreed on a series of reforms to address the euro zone sovereign debt crisis. The Euro has strengthened against the dollar to 1.34. Markets liked that Angela Merkel said "We need binding debt brakes, which can be verified by the European court of Justice ... in order for the Stability and Growth Pact to hold,".

Still the issue remains that both Germany and France are currently above the Maastricht limit. France has 84.7% debt to GDP and Germany has 82.4%. Both of the two 'fiscal leaders' of Europe have a worse debt to GDP than Spain at 68.1%. They still have a lot to address.

Keep an eye on the dollar index as seen with 'UUP'. The dollar is still in an 'Up Signal' as seen on the weekly charts here:

http://www.chartsandsignals.com/ic-sig2.html

Monthly and Weekly Charts Show Reversal Potential on RIG

Transocean Symbol:RIG has the potential for an early reversal indication on all three charts, monthly, weekly and daily. The close after the last week of November will be key. Keep this one on your radar, as a reversal signal with period lows on all three charts could be a nice entry point.

http://www.chartsandsignals.com/icc-vucomm-dtl.cfm?editid=27&src=vucomm

Separated New Zealand Telecom debut

According to Reuters "Shares of newly structured New Zealand phone company Telecom Corp. debuted at NZ$1.97 on Wednesday while its spinoff network unit Chorus started at NZ$3.03 in a slightly firmer market."

"Telecom, once New Zealand's largest listed company, has split into a retail operation, and a fixed line operator, as a condition of winning the contract to roll out most of the New Zealand government-sponsored ultrafast broadband network."

http://www.reuters.com/article/2011/11/22/telecom-chorus-idUSL4E7ML38V20111122

Our Signals are Great Trend Indicators

My computer generated "Down Signals" for the S&P have been 100% accurate so far for 2010 and 2011 (The only unknown is always "How far down?" on any single signal). Currently the S&P market pattern looks similar to May-August 2010. Back then the algorithm correctly indicated the entry and exit of the correction with the yellow and turquoise stars (Weeks of May 7th & Sept 17th, 2010). Here's what the signals look like for the S&P now and then:

http://www.chartsandsignals.com/ic-sig1.html
Other than bonds, the financial "safe haven" this summer was tobacco in addition to gold*. Especially dividend paying tobacco companies. From late July to now, Reynolds (RAI) gained 5.6%, Altria (MO) gained 2.4%, and Lorillard (LO) gained 4%. That's not including any dividends paid ... and those dividends currently range from 4.6 to 6.1% annualized.