APPLE Technicals Behavior - DOW Index Impact ?
March 8 ( From TradingView )
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As I mentioned in the Relatively Speaking Research a few weeks ago, So it is time indeed to think in a relatively way - I mean Long Apple Shares and Short the SP500 Index. So Days were AAPL underperform SP500, it is time to add and unload when AAPL outperform....
I will give you Updates on Specific Trading Levels in the Dailys as Usual.
So if we take Closing Prices on March 5th as a proxy before the annoucement into the Index:
AAPL : $126.41
SP500 Index : 2101.04
So a ratio of 126.41 / 2101.04 = .0601
When the ratio will hit 3% more in value than the March 5 th closing, then we can say that the Dow Impact have already been discounted...
So .0601 X 1.03 = .0619
Or we can say, keeping SP500 Index as is and boosting AAPL price:
$126.41 X 1.03 = $130.20
So my point here is that I do not expect a new high from the DOW Impact BUT only that it will strenghten the already outperformance of AAPL shares over the SP500 Index...
SP500 is at crossroad and near testing the previous break out level. So, again, we can expect an outperformance of AAPL But IF SP500 Index break that support, we can have a pattern where AAPL Shares price fall also...
The Weekly March 13 127 Straddle ( Long Call and Long Put ) closed last Friday at $4.38 and
I will follow that straddle this week...
March 8: DOW Index Impact ?
So finally Apple was added to the prestigious DOW Jones Index.
But as we will see, it is more glamor and a short term Impact on its stock price
than anything else.
From Market Watch:
In fact, there is a “clear pattern” of good performance leading up to an addition, then “bad performance following,” said Jason Goepfert, president of Sundial Capital Research, who analyzed stock-price trends of the last 20 DJIA additions during the 20 days before their addition and 20 days after. Of course, some of the declines may be due to mean reversion.
Bernstein Research analyst Toni Sacconaghi said companies added to the Dow outperform the S&P 500 by 3% in the 30 days after the announcement of their inclusion. With Dow Jones Indexes typically announcing the change one to three weeks before a company is actually added, Sacconaghi said this may indicate “incremental demand for shares” immediately after the initial announcement.
See also the chart below.
Performance of Stocks Added to the DJIA
20 Tradings Days before and after