Category Archives: upside target

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Watch List Summary

In the November 2, 2012 Watch List summary we pointed out NetApp (NTAP) as a viable investment candidate.  In the two weeks since, NTAP has managed to rise +9% while the Nasdaq 100 and Apple Inc. declined –4% and –9%, respectively.  NTAP is sitting at $30.26 price and may have found some support at that level. Although we’re hopeful about the prospects of this company, we recommend putting +9% gains in two weeks into perspective and decide if selling the principle is the most prudent approach to take.

On the November 2, 2012, we discussed the prospects for Dell (DELL).  At the time we felt that the stock had a high probability of going back to the $8 level.  On Friday November 16, 2012, we believe that DELL has fallen through the last line of technical defense against going to the $8 level.  We believe that on a short-term basis DELL will rise on a possible market reaction.  However, the intermediate-term seems to indicate that DELL will go to $8 before any “true” indication of prospects is revealed, unless the company gets acquired which seems possible.  Dell would be one of the best acquistion target of any computer manufacturer since Lenovo bought the personal computer division from IBM.

Apple Inc (AAPL) and short-term Dow Theory analysis

As described in our last Nasdaq 100 Watch List dated November 2, 2012, Apple Inc. (AAPL) is the stock to watch.  Right now, there are many who are suggesting that the bottom is in for AAPL.  For various reasons, we believe that the verdict has not been delivered on this stock.  Especially since AAPL managed to close below the May 2012 low, a previous technical low point for the stock.  Regardless of our view on the matter, we’d like to see what Dow Theory has to say about the upside prospects from the current price.  The chart below outlines the four upside targets for AAPL.

Starting with the first upside target is the $572.19 level.  This is an easily attainable level for the stock and would equal an +8.44% gain from the closing price of Friday November 16, 2012.  After coming off of such a dramatic decline that was started on September 17th, we should expect this as the minimum reaction of a declining trend.  There is little in the way to suggest that AAPL is clearly on the ascent when it reaches $572.19.  However, in theory, this would be the easiest money every made in AAPL stock.

The next upside target for Apple Inc. (AAPL) is $605.41.   This level is based on Dow’s 50% principle which indicates the average price paid by long-term investors and would be compelled to continue holding the stock if it rises above this level.  If AAPL can manage to rise above this level then long-term investors are likely to hold their positions in the stock, leaving speculators to push the stock higher.  However, failure to rise above the $605.41 level and falling below the $505 level will be confirmation that the trend of the stock is much lower than the $505 level.

The $638.63 price falls in line with Dow’s assertion that stocks then can retrace 1/3 to 5/8 of the previous move.  In this case, the $638 level is 2/3 of the previous decline.  Rising to such a level almost assures that the stock will rise to the previous high.  However, those wishing to take advantage of such a “guaranteed” move to the upside should be aware of the risk that any gains that are achieved can be quickly taken away.  This would be the hardest money ever made for any speculator in AAPL’s stock.

Finally, rising above the $705 level would be the only indication that the stock is going higher in a meaningful fashion.  We believe that if AAPL manages to exceed prior high then there are great opportunities of other tech companies near a new 52-week low to take advantage of the renewed faith in Apple Inc.