A Rough Couple of Days for Apple Computer

On news that Steve Jobs, Apple CEO, is going on medical leave, Apple Computer has had a rough couple of days in the stock market and generated lots of speculation in the press (here and here). At the end of trading today (above), AAPL was trading down about 1/2 per cent at 338.84. Still, many analysts remained positive on Apple, especially as a result of a record earnings report (here). On CNBC, Jim Cramer increased his price target to $400 from $325 (here). How does this relate to my initially pessimistic forecast for Apple (here)?

First, in Burton Malkiel's terms (here), Steve Jobs medical leave is truly random, unpredictable news. The negative shock to Apple Stock, however, is predictable. In terms of my original pessimistic forecast (here), notice that the forecast is based on data ending in January 2010. Using all of 2010 (above) I get a much more optimistic forecast.

The new attractor plot (above) shows the stock peaks as the major attractor points.
Just projecting the attractor into the future (rather than using the actual stock data) shows strong growth for Apple through 2020. Just to be clear, the graphic above is the result of a free simulation starting in September 1984 and going forward to 2020. A forecast (second graphic above) uses step-ahead predictions from the actual data for each month starting in September 1984. Once the data runs out (January 2011), the forecast data is used for the prior month's stock value.
Returning to Jim Cramer's $400 price target, the attractor forecast suggests that $400 is somewhat unlikely until well into 2011.

DISCLAIMER: I have held Apple stock since 1988. None of the forecasts presented in this blog should be used to make buy or sell decisions. The usefulness of the models and the forecasts will have to be evaluated at some point in the future. My particular interest is to evaluate the models in terms of the random walk hypothesis and Burton Malkiel's persuasive view of the stock market (here). At this point, the models merely say that AAPL is not a random walk stock. What that results means for stock forecasting is unclear.