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TheStreet Open House

Apple Is a Gift You Won't Want To Re-Gift

NEW YORK ( TheStreet) -- As painful for many as Apple's (AAPL) decline from $700 was, it's fascinating to note that not only was iStock up for 2012, it increased in value four out of the last four years.

Apple turned decidedly bearish on the daily chart, but did you know that Apple on the weekly and monthly charts is still in a bullish trend? On the weekly chart, the 60- and 90-period moving averages are above a rising 200-period moving average.

If you consider the monthly chart, the pattern appears even more bullish. Not only are the faster- moving averages climbing and above the 200-period moving average, but the shares have remained above the moving averages since 2009.

The weekly and especially the monthly charts should be given more weight than a daily chart. Unless you're actively buying and selling shares (or maybe hedging with options), you may not even need to look at a daily chart.

For true long-term investors, the daily chart offers increased noise and distractions that may take your eye off the real prize. If you can, pull up a monthly chart and look at it while I highlight some key figures. I think you will find any doubt generated as a result of supposed price weakness while the company produces record amounts of profits quickly disappears.

AAPL Gross Profit Quarterly Chart AAPL Gross Profit Quarterly data by YCharts

On the monthly chart, Apple closed above $200 for the first time near the end of 2009. This is the same time that the gross profit chart also reaches its highest level. Two years later, Apple's stock has doubled to close over $400, but the gross profit isn't keeping up. The gross profit is "only" about $20 billion with per-share earnings near $14.

What this tells us is that slower growth was already priced in at the end of 2011. At the end of 2012, all earnings growth was removed from the price, and it's clear that investors started pricing in declining growth. Once the stock fell under $600 we started reading "value investment and Tim Cook is no Steve Jobs."

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