We all know that when a company has a line of products that keeps growing and giving customers reasons to upgrade or buy multiple products from that company, the annual revenue numbers can continue to set new highs.
But what about the company’s stock price? Can that go up endlessly as well?
It is a little different with the stock. The stock price will go up only if there is an imbalance in buying strength versus selling strength. As long as buyers are willing to pay up for the stock in order to become new holders of the stock (or add to current positions) the price will likely rise.
But what if the stock runs out of buyers? Even if the amount of stock being offered for sale is low, if the buying interest dwindles enough, the stock price will be in danger no matter how well the company is doing.
iPhone and iPad sales have propelled Apple Inc. stock price upwards for two solid years now. Apple customers have not only purchased one of their expensive products, but in many cases are acquiring multiple Apple products.
However, an interesting thing has been happening with the stock. AAPL has gained more than 100% over the past two years. But at the same time, the average volume has declined 75%:
One has to wonder just how many buyers are left? Enough to propel the stock for another 100% gain in the foreseeable future? How about even just another 20% gain?
How about another ‘darling’ tech stock – Facebook (FB)?
FB has gained 35% over the past year, but the average volume has fallen 57% over the same time period:
Again, how many buyers are left?
The good news is this pattern does not exist with all stocks. There are still some good buys out there but they are becoming harder to find. Before you click the ‘buy’ button on a new addition to your portfolio, look for evidence that you might be one of the last buyers for that stock.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com.
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