It could continue to drop says trader Mark Dow. When a stock loses its momentum, you can throw out the fundamentals, says Dow. Based on a simple technical analysis, he believes it could slide all the way to $425:
While I’m here, let me make a quick, behavioural point on AAPL. AAPL has been THE story stock in the market over the past few years. It has been our collective obsession. It has sucked all the oxygen out of every financial chat room and could do no wrong. I can’t speak to the fundamentals, which may or may not have changed, but I do know this: once the fever breaks on a story that is so beloved, sentiment usually doesn’t stop deteriorating until the pendulum has overshot to the other side. And I get no sense we are near that point yet. I still see virtually all knife-catchers and no momentum shortsellers, and until this changes, it is probably not safe to buy the fruit.
Oh, and by the way, if the stock continues to go down, even if there aren’t good reasons for it, convincing-sounding reasons will be found. In the near-to-medium term story follows price more than price follows story more often than we are inclined to think.
Simple technical analysis suggests AAPL could go back to the area it broke out from in January, when the AAPL fever really took hold. That would correspond to price of about 425.