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4 Keys to Apple's Stock

Stocks in this article: AAPL

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Let's take a moment to recap and interpret four of the important variables we have been discussing at related to Apple's (AAPL) current and future stock action:

1. Apple weekly action: The hedge funds have been making money in Apple while everyone else scratches their heads as to why the stock has stalled since November.

We've looked at the effect of the weekly options on Apple stock that began last June and have concluded that the big money is taking advantage of greedy weekly options players. A quick historical recap of Apple action: from the March 2009 lows through November 2009, Apple should have been bought and held in a portfolio; from December 2009 through November 2010, Apple should have been traded according to the slingshot hedge fund pattern; and from November 5, 2010 through May 26, 2011 investors needed to buy Apple at the Monday low and sell it at the Thursday high.

In this latest round of hedge fund manipulation the stock routinely gets pounded on Friday afternoons and Monday mornings as hedge funds profit from the weekly options action. If we exclude such action from our calculations, the stock would be priced at $490 today.

Knowing that Apple is trading according to a weekly pattern provides us with a foundation to make correct interpretations as to current Apple stock action. What does it mean when Apple surges into a Friday close (after selling off seven of the last eight Fridays) and then rises $10 on Monday?

Apple's foray into the cloud environment could be the biggest catalyst for the stock in 2011.

It means the big money is abandoning the weekly gimmick and is hugely bullish ahead of the WWDC Steve Jobs keynote; Apple option LEAPS should be owned. Hedge funds are going out of their way to buy this stock ahead of the iCloud announcement and individual investors should take heed.

2. The biggest catalyst of the year: Speaking of iCloud, in April we mentioned that Apple's foray into the cloud would be the most important investment catalyst of the year for the stock. The appetite for cloud stocks on Wall Street is increasing by the minute but thus far Apple has been left out of the cloud-centric run.

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