On September 15, 2010 we publicly announced the launch of MarketSmith and we couldn’t be more excited. After hosting a successful launch event in New York City, our President, W. Scott O’Neil appeared on CNBC’s Fast Money to talk about MarketSmith and the market.Since his appearance, we received many calls requesting us to further elaborate on Scott’s comparison between Xerox’s (XRX) price run in the 1960’s and what is happening with Apple (AAPL) currently.

 

What we do at our company is invest in the current market leaders – establish a position at the right time, add to that position at additional low risk entry points, hold on through the price move, and finally exit the trade somewhere near the top. To help us with the timing of our decisions, we conduct historical precedent analysis and study examples of past leaders whose price and volume action resembles that of the current market leaders. This is why subscribing to MarketSmith, with its Change Date feature going back 50 years is so critical.

 

To illustrate the example that Scott discussed on Fast Money, pull up a Daily chart for Xerox (XRX) with an end date of 3/13/1963. Xerox is a fantastic precedent for Apple because at the time, Xerox was a pioneer of technology, just as Apple is today. They had experienced a substantial prior move, consolidated those gains at the new higher level, and emerged to have tremendous secondary price runs. Where we see the biggest similarity to Apple’s current chart is back on the 3/13/1963 Xerox chart as it begins to break out of its consolidation base. This precedent, along with solid qualitative research, gives us the confidence to begin building the position.

 

Should this precedent break and Apple fail to continue its price advancement, our sell rules will tell us what to do.

 

Best Returns,

 

Your MarketSmith Education Team

 

 

*At the time of this post, W. Scott O’Neil currently holds a position in Apple (AAPL).