By Timothy Lutts
The second most important rule for growth investors might be to respect strong charts.
Case in point, Apple (AAPL), which broke out of a basing pattern on Wednesday, gapping up to new all-time highs.
Now, Apple is far from an undiscovered stock. With revenues of $37 billion and a market capitalization of $192 billion, it’s a giant, and my preference is for smaller companies with more obvious upside potential in investor perception.
Nevertheless, Apple’s chart is sending a strong signal.
For the past 10 weeks it’s been building a base at the 200 level, which is where the stock topped out at the end of 2007. And Wednesday it gapped up to all-time highs, telling us big institutional money is moving in.
The only “news” lately is speculation that Apple’s long-rumored tablet computer will be released on January 26, in both 7″ and 10″ screen formats, and that it will be a big hit. It certainly sounds plausible, and combined with the fact that Apple still has great numbers (revenues up 25% in the third quarter and earnings up 44%), I think it’s reason enough to buy the stock.
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