Don't Ignore This Chart!

Is Apple AAPL The New Walmart WMT?

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Apple was loved for growth earlier in the decade but it looks like it is now loved for cash flow.

Recently WMT made a move above its 200 DMA and AAPL also started moving. That was intriguing.

After glancing at the price action on both charts, I noticed they were starting to behave the same. So I created this chart. 

WMT AAPL 20140326

It could be that investors are moving to safety and still trying to find some upside.


The correlation has been very high for 8 of the last 10 months. It could just be an environment where the Fed moved everyone together. It is the recent price action in the last 5 months where they both topped early December, everything made the early February lows and they both recently broke out above declining trendlines. Compare that with GOOG, AMZN and other momentum stocks. It would appear AAPL has moved to the investment status of MSFT or CSCO from the investment community. Stable revenues from a great company but hard to move the growth needle on innovative products after 3 world wide home runs. Those three would be the iPod, iPhone and iPad.

So it might not be that AAPL is climbing because of some new wearable device. It might just be it is a large company with a bullet proof balance sheet, wonderful cash flow and a mountain of cash. This can protect institutional investors that are starting to see the bond markets rally and are equity only funds.

Good trading,

Greg Schnell, CMT

 

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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