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New iPad, New Apple TV, Same Old Stock Price

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Apple (AAPL) introduced a new Apple TV and the new iPad, but the stock price barely budged.  This underscores that there are several important internals of trading in Apple stock that astute investors should be in tune with.

The chart below shows movement of Apple stock on prior event days.

Our computers show that ratio of up ticks to down ticks was 0.99. This is slightly negative. On most days, Apple exhibits ratio of upticks to downticks well above 1.00.

Image by Getty Images via @daylife

Ratio of up blocks to down blocks was 0.67.  Block trades are an indication of institutional activity. This used to be a very important piece of information, but these days it should be taken with a grain of salt. These days most institutions use algorithms to break down blocks into smaller trades.

On its face, the foregoing data can be interpreted as institutions were net sellers and individual investors were net buyers.

Our proprietary algorithms that measure the actions of smart money show that the smart money was a net seller of $126.3 million of Apple stock. This is only the third day in 2012 that smart money has been a net seller of Apple stock.

Market observers have long been attempting to measure the internals of trading. Market technicians have developed hundreds of methods over years to this end. The most famous such indicator is Joe Granville’s On Balance Volume (OBV) indicator. OBV was originally named Cumulative Volume by Woods and Vignolia.  In 1946, Granville rechristened it with the name OBV.

Joe Granville is known for his accurate market calls in the 1970s and 1980s. In my lifetime, I have not known any other market technician who could move markets like Granville could.

When Granville popularized On Balance Volume in 1963, he did not have advantage of the computing power we possess today.  The indicators discussed in this article are simply refinements of Granville’s work made easy by readily available computing power.

Internals of trading when followed over a period of time give important clues about the direction of a stock.

About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the Chief Investment Officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com. You can follow me here and get email notification when I publish a new article.

Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, and $525.