Apple (AAPL) closed below 50dma level again. Apple has pulled back almost $53 from the high since latest earning announcement. When a company announces earnings that almost doubled smashing even the most bullish expectations and the stock was already selling well below the average P/E ratio of the market, how can it continue to fall day after day?
After pulling back ~$80, there are a lot of theories supporting why AAPL has been falling. Some of those are-
- This is profit taking as stock has almost doubled from lows since November.
- AAPL shares are being unloaded to generate cash for Facebook (FB) IPO and once FB starts trading, money will flow back to AAPL.
- Options are driving AAPL share pricing depending upon where market makers’ interest lies.
Whatever be the reason, do take a note that it is down just a 15% from the top on April 10th. Usually when a stock drops 10-15% from the high, it doesn’t create as much buzz. However, since AAPL is in completely different league thus everything around AAPL creates buzz.
So, where is it headed next? No one knows. And those who do don’t talk about it. This article is not to predict where AAPL is headed but rather to give you few “what if” scenarios which might potentially help you in preparation should that “what if” comes true.
First here is a chart summarizing daily price action of AAPL shares during recent past-
- The Highest level is $644
- Recent low prior to earnings is $555
- On May 5th, AAPL closed at $565.25
(click to enlarge)
[Source : TD Ameritrade Charts]
After a 15% pullback, the key question now is where it can go next? There are three possible scenarios- [click to continue reading…]
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