Apple Inc. AAPL 1.82% traders are scrambling to decide how to play the company’s earnings report coming after the market close. Fundamental and technical traders have been pouring over countless metrics for days trying to decipher what to expect from Apple and the Apple Watch.
Unusual Pattern
One website, EidoSearch, takes a unique approach to predicting future stock movement, and the site’s technically-based search software identified Apple’s current trading pattern as a particularly unusual pattern for Apple during the past decade.
In fact, according to EidoSearch, Apple’s past month of trading only closely resembles two other months of trading since 2007.
How Does EidoSearch Work?
According to its website, the EidoSearch search software is strictly based on price action of a stock. The EidoSearch software focuses on identifying time periods in the past when a stock has traded most similarly to its recent trading pattern.
While the software does not address the underlying causes of the trading patterns (investor sentiment, fundamental news, liquidity etc.), its usefulness is based on the idea that patterns repeat themselves over time in the stock market.
“Although the behavior of market participants and their responses to changes in market conditions and microstructure change over time, we should expect some consistency in their expected behavior,” the site explains.
What Does It Mean?
EidoSearch software Identified October 2013 and October 2007 as the two months in the past seven-plus years in which Apple’s stock has traded most similarly to the way it has traded during the month leading up to this week.
For those that do not remember, Apple released strong earnings numbers in October 2013 on the strength of the launch of the iPhone 5s and 5c.
Way back in October 2007, Apple blew earnings expectations out of the water on the heels of the launch of the original iPhone in June, 2007.
According to EidoSearch, if Apple’s stock continues to follow the patterns from 2007 and 2013, traders should expect a price of $135 by the end of this week.
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