Apple “Is Dead”

Apple has always been considered a major business player, with serious marketing platforms, but the stocks have recently shown things differently. After hearing all the news about how their stocks are in a downtrend, it really is mind-boggling as to how this had happened, since Apple has been notoriously at the forefront of every innovation that we are enjoying today. Ever since the death of Apple’s co-founder and former CEO, Steve Jobs, there have been a lot of speculations as to how Steve’s untimely demise affects Apple’s stocks. Stock owners have mixed feelings over Apple’s new CEO, and the direction that Apple will be going. But then again, their worst fear may be coming much earlier than they have thought to be.

Back then, Apple’s shares (US: AAPL)  were trading at $363.57, but in September of 2012, Apple’s shares have hit a peak of $705, and people were more than happy to hold their shares. At $705, the shares were not as cheap as they once were, the relative performance was phenomenal, and the chart was obviously hitting new heights, although it was starting to get extended.

Everyone who owned Apple stocks at that point had a profit in the stock. It was getting hard to find much more demand, as most of had already been satisfied. The stock finally started to roll over after a huge rise.

As a widely held, big winner like Apple begins to degenerate, it goes through several stages of distribution. At first, the correction looks like nothing more than a routing pullback within the primary uptrend. Moreover, the nervous Nellies and short-term traders are the first ones to head for the exit.

Apple had always bounced back, in the past, after a bout of profit-taking and marched on to new greatness. This ocassion seems to be pretty different, however. In early October, the stock broke below its 50-day moving average for the first time in just six months. The early profit-taking started to escalate into some really serious selling. Many people have sold their shares last Oct. 8, at $637 per share.

The Apple stock is still making sense from a valuation point of view, however there are two other criteria that have been violated as the stock’s relative performance against the 3,200 other stocks were dropping fast. Sadly, it no longer has a healthy stock chart.

In the mid-October, the 20-day moving average crossed below the 50-day for the very first time in five months. This was called a death cross, and now, even firm believers in the stock began to take notice of it. Early profit-taking had turned into serious selling, and now panic selling was starting to emerge from everywhere.

And then, the Apple’s stock proceeded to go almost downward for almost two months. Its full-blown distribution has finally become the America’s favourite, and $705 has become $505 very quickly. And it seems to most people that they should avoid buying stocks that are in a downtrend. Even though it was tempting, one first needed to find out where the downtrend would eventually end.

Apple’s stock had some support in the $500 area, but after a quick little 90-point bounce, the ugly downtrend resumed. The stock tested $500 once more, and it seems like it might hold, but then gapped down again following the earnings, and finally settled in the $450 margin.