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Without a doubt, Apple’s (Nasdaq: AAPL) stock chart from September 2012 to present is one of the most depressing sights in Wall Street history – Apple investors, analysts, employees, even onlookers are moved to tears by the stock’s dramatic fall from grace. The only people smiling about Apple these days are those investors with the cojones to short the stock, but with only 2 percent short interest, those investors are few and far between.
Apple stock has declined 39 percent since reaching highs near $700, and for many investors owning Apple stock has been a true heartache, not to mention a pain in the wallet. Recently, a number of analysts have downgraded the stock. Given the backward looking view, investors are left shaking their head and cursing under their breath. Befuddled, confused, many investors are simply fed up with Apple. However, selling Apple now could be a mistake, especially for those investors who still have faith in the company.
The good news is Apple’s stock may form a base near $400 to $420.
$400 to $420 is significant for a number of reasons. First of all, psychologically $400 is a nice round number, and so if bulls were going to make a stand, this seems a reasonable place. Second, $420 was the key breakout level for Apple prior to its massive 2012 rally. With this in mind, at the very least it will likely prove to be an important area of support for AAPL.
In addition to technical factors, Apple’s cash distribution catalyst is likely only a few weeks away. The company will likely raise the dividend, announce a special one-time dividend, raise the buyback or announce a special one-time buyback. There is also David Einhorn’s ‘iPrefs’ idea.
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