Linear charts may offer the false impression that the current fall in the price of Apple Inc. stock is the worst ever. But this illusion is not present in log price and drawdown charts. In fact, Apple Inc. stock has a long history of delivering large price swings.
Below is the log price chart and drawdown chart of Apple Inc. stock (AAPL) since 1990:
The log price chart along with the drawdown from previous all-time highs chart confirm that the recent correction is only one point in a long sequence of large and at times devastating corrections in this stock. Below is a table of drawdown levels larger than -30% from previous all-time highs by the year of their occurrence:
|1990 – 1991||-39%|
|1996 – 1998||-67%|
|2001 – 2003||-81%|
It may be seen that in 2013 the drawdown from all-time highs reached -40%. Despite that the stock made new highs in 2014. This sequence of large and at times devastating drawdown levels is probably the result of a fight between bulls and bears: when bears and their sentiment dominate, there is drawdown that shakes out weak hands.
Is AAPL going to register new all-time highs in the future? No one can answer this question and anyone who even tries is too naive no matter how sophisticate is the analysis. Short-sellers constantly attempt to time peaks in long uptrends among other things but their success record is not very good.
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Charting and backtesting program: Amibroker