Research Excerpts

AAPL’s 5% April Decline: Buying Opportunity Or More Pain Coming?

Posted on: Wednesday, April 16th, 2014

Almost 3 weeks ago John Kosar, our Director of Research, was invited to appear on Yahoo! Finance’s Talking Numbers segment on CNBC to discuss the future prospects for the direction of Technology bellwether Apple Inc. (AAPL), following rumors that the tech giant would be releasing a large screen iPhone 6 as soon as September.  The video from that interview is available below, or by clicking here.

During the interview John said:

“I’m not so sure I want to jump into the pool right now.  The stock is overbought on a monthly basis. “My inclination is to wait a few weeks. Wait for a pullback towards $500 – you have some major support there around $502 – and then watch for that stock to get a little traction again and then enter. I think larger picture, we take a run at those highs at $583 to $595.”

AAPL closed at $537 the day of the interview, and has since collapsed by $26 per share or -5% into the $511 April 16th lows.

The chart below shows that this decline has positioned the stock just above its 200-day moving average, a widely-watched major trend proxy currently situated at $509 per share.  We view this as an opportunity to consider closing out the near term shorting opportunity that we discussed on March 28th for a nice profit within just a few weeks.

AAPL and 200-day MA daily since September 2013

AAPL and 200-day MA daily since September 2013

Since AAPL comprises 13% of the Technology Sector, and Technology tends to lead the US broad market both higher and lower, we are now watching the stock’s reaction to this major support level very closely — in addition to monitoring our own ETF-based asset flow metrics for the broader Technology sectoras a potential coincident or leading indication of the US broad market’s next one to several month trending phase.

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AAPL’s 5% April Decline: Buying Opportunity Or More Pain Coming?:

Appeared on:
April 16th, 2014 at 10:15 am