Apple Lost Its Mojo

NEW YORK (TheStreet) -- When you invest in a market that is extremely overvalued fundamentally, momentum trading takes over. When you employ a buy-and-trade investment strategy for a specific stock the reason to buy does not have to be based on valuation, it can be based upon momentum. In either case you use a good-til-cancelled limit order to buy weakness to a value level and once long, you use a GTC limit order to sell strength to a risky level.

On Aug. 23, I wrote Apple Has Mojo, Google Does Not and this was after Apple ( AAPL) ($467.71) became overbought on its daily chart and had tested my annual pivot at $510.64 on Aug. 19. Buy-and-trade investors thus had the opportunity to book profits at $510.64 as an annual risky level. To keep its mojo status Apple needed to have a close above $510.64, but that did not happen.

On Wednesday morning investors were disappointed about Apple's new product launches and Apple fell from the tree into the investors woodshed with a day's low at $464.81, just above its 50-day and 200-day simple moving averages converged at $462.96 and $463.34. This should be considered a technical zone of support. The weekly chart stays positive if Apple ends the week above its five-week modified moving average at $471.91.

Apple has a hold rating according to www.ValuEngine.com with fair value at $453.97, which makes the stock 3% overvalued. My annual value level is $421.05 with the ValuEngine one-year price target at $492.12.

Amazon.com ( AMZN) ($299.64) declined from an all -time high at $313.62 on July 27 to $279.33 on Aug. 28, and then momentum began to rise on its daily chart. Amazon fell below its 50-day simple moving average at $290.59 on Aug. 15 and today is back above this key level now at $295.46 trading as high at $301.86 on Wednesday. The weekly chart is neutral with declining momentum but with the stock above its five-week modified moving average at $292.69.

Amazon has a hold rating with fair value at $246.96, which makes the stock 21.3% overvalued. My quarterly value level is $272.68 with the ValuEngine one-year price target at $297.47, and my semiannual risky level at $313.60, which was tested at the July 27 high.

Google ( GOOG) ($896.19) declined from an all time high at $928.00 on July 15 to $845.56 on Aug. 30, and then momentum began to rise on its daily chart. Google fell below its 50-day SMA at $890.96 on Aug. 12 and is now above this key level which is $887.17 with a Wednesday high at $896.97. The weekly chart profile is neutral with declining momentum with the stock above its five-week MMA at $879.25.

Google has a hold rating with fair value at $693.40, which makes the stock 29.3% overvalued. My weekly value level is $835.25 with semiannual pivots at $880.49 and $892.48, which have been magnets in recent trading. My quarterly risky level at $915.63 was tested at the all time high. The ValuEngine one-year price target is $916.19.

Netflix ( NFLX) ($308.30) set a new all time high at $314.18 on Wednesday as the daily chart became extremely overbought. The weekly chart is positive but overbought with the five-week MMA at $273.10.

Netflix has a buy rating with fair value at $177.91, which makes the stock 73.3% overvalued, but the ValuEngine one-year price target is $326.32. This week's value level is $279.19 with this month's risky level at $353.70. My semiannual value level is $237.48, which was a risky level when July began.

Tesla Motors ( TSLA) ($163.52) set an all-time high at $173.70 on Sept. 3 then dipped to $158.51 on Sept. 9. The daily chart shows a negative divergence in momentum suggesting that a new high is not likely over the near term. The weekly chart profile is extremely overbought with the five-week MMA at $149.81.

Tesla has a hold rating with fair value at $125.21, which makes the stock 30.6% overvalued. My monthly value level is $153.16 with the ValuEngine one-year price target at $157.92 and weekly risky level at $169.40.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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