Our Analysis on AAPL Stock shows a strong Sell-Signal back at the $700/share level on September 24th, with a LCD (Low-Close Doji) confirming the Sell Signal on September 25th. This also co-incided with the release of iPhone5 and the iPadMini.
This $705.07 High was followed by a steady, 200-point sell off until AAPL reached $505.75. It then retraced to just over the 38.2% level on the Fibonacci Retracement Lines – a weak retracement for AAPL, being that it usually retraces at least to the 50% or 61.8% level.
We believe the massive sell-off is due to three main reasons:
1. Seasonality. Tech Stocks in general, including AAPL, have a history of rising early in the year, selling off in May through August, rising again in September and through early October, then selling off through a short “Christmas Rally,” before year’s end.
2. Natural Pullback. There was a natural pull-back in AAPL- after all it had gone from the $529/share price level back on 5/21/12 all the way up to $700 in September, without really a healthy retracement.
3. Capital Gains Tax Laws Changing. We believe that the strong Capital Gains increase after 12/31/12 is an enormous factor in the giant sell-off for AAPL. This is producing head-winds for the stock going into the end of the year. While the economy remains tepid, AAPL’s products continue to sell well, and the iPhone5 and iPadMini products are world-class onto themselves.
While there is a GAP in AAPL created early this year from $426 to $455, we believe AAPL is a strong buy given it’s EPS (over 44.15) and entrenched brand. It is soley a question of if AAPL gets another 20% sell-0ff going into the mid-Feb 2013 “S&P Long” Buying season that typically occurs from Feb-April annually.
We are looking at an S1 Monthly Support level for January of about $481/share. AAPL’s December S1 Monthly Support level of $526.35 was already violated, giving indication there may be some more downside prior to the Feb 2013 S&P Buying Season.
We believe there will be an immediate (prior to 12/31/12) retracement to the $529 and $539 levels, and a 90-day retracement to the $580-$600/share levels, at a minimum.
Hopefully AAPL’s Q1 (already underway) will prove fruitful on January 24, 2013.
nyTrader 