|Tablet Space: Apple and Its Rivals|
|Written by L.A. Little|
|Wednesday, 16 March 2011 12:36|
L.A. writes a piece weekly for TheStreet.com and this week's article is reprinted here with permission.
I’ll only look at the intermediate term time frame for each of these stocks (except for Motorola which only has a short term timeframe given the spinoff) given the number of stocks to examine. Recognize that the tablet computers are just a small part of each company’s revenue source so the charts reflect much more than just tablet possibilities. Starting with Apple, the stock is building out a large trading floor at the highs. It has been doing this for some time now.
Apple’s stock has been a confounding stock for me personally. Ever since the 2009 low, it has failed to confirm on volume yet it has refused to break a swing point to signal a correction. In the past, I have tried to predict a turn. I was wrong each time. This stock, more than any other stock, has made me realize that suspect trends can continue for a very long time - much longer than I would have ever guessed.
The current chart shows two clear support zones. Both happen to be retest and regenerate zones as well. I could easily see Apple retesting the $325 area which is the higher of the two. If it were to fail at that level, that would be the first time a swing point was broken on an intermediate term time frame and it would lead me to believe that the second lower support zone was truly possible. For now, I have to assume that the higher zone will hold. This continues to be the stock to buy on retraces.
Google is using its Android system to increase the visibility of its all-important ad visibility which ups its revenue equation. I like this stock a lot and would look to be a buyer in the support zone. It almost got there yesterday. A quick move back to $600 presents a nice trade and a build out of this large price floor is likely over the coming weeks. The real trade is longer term though, since once the highs shown here are surpassed only the all-time highs remain. I believe they will be reached again. Risk here is quite favorable given these parameters.
The only dog in the group is Motorola. This stock keeps broadcasting the message “avoid” to all potential buyers. Until a base can form, you have to look elsewhere. I doubt seriously that their tablet will change this equation.
In the tablet space, the go-to trade remains Apple but all of these stocks are purchases on further retraces, not at current price points with the exception of Motorola. If you consider that Google will win with the revenue bumps off of ads, you can see both of these companies being continued winners as a result. RIMM has a good looking chart but that is based on their loyal user base, not the possibility of tablet sales. That would be a welcome surprise were it to find its way to success. Some sort of tight integration with their mobile applications would seem to be the ticket for them.
Thanks for reading and until next time, just keep trading the charts!