Nasdaq Finds Bottom??? Greed Conquers Fear! The TMO Stock Watch Virtual Portfolio Buys More AAPL

by , 12:50 PM EDT, October 11th, 2000

While it is extremely dangerous to attempt predictions of market bottoms, Apple's stock is now close to as low as it is rationally possible to slide. In fact, analysis of AAPL's chart indicates that the stock is likely to find support in the $16 to $19 range.

At these low levels many short traders who sold the stock short on the day after the big fall will begin to cover. Meanwhile, mutual funds and value-chasing "bottom fishers" will begin to alter the demand balance of shares of AAPL from heavy on the sellers to heavy on buyers.

Apple reports earnings on October 18th, so buying the stock today is a gamble that the company has revealed the worst of the negative news going forward and that the Nasdaq will successfully test the year's low this week and begin its inevitable come back. Both assumptions are far from risk free.

If the Nasdaq breaks down below the year's low of 3164, more downside is almost assured and AAPL will fall lower. But if today is the bottom, AAPL could easily be back to $30 per share by Christmas.

Apple has yet to offer the lower earnings and revenue guidance Fred Anderson promised to deliver in the conference call next Wednesday afternoon. At this point, it is difficult to access how much of Apple's earnings shortfall is due to macro-economic conditions beyond the company's control and how much of it is due to unsuccessful management strategies.

Therefore, greed has finally conquered our fear here at TMO and we are added 100 shares of AAPL to our Mac Observer Stock Watch Virtual Portfolio at noon, EST today, at $19.50 a share. Please note this is a "virtual" -- not real -- portfolio and is designed to illustrate one investor's journey in tech stock investing. So far this year, it's been a disaster.

For more gruesome details of AAPL's fall from grace read The Apple Trader Column, Apple Explained, Part 1: In Steve We Trust. In part 2, as an important part of the bottoming process, I'll outline all the things that could possibly go wrong at Apple in the next year and contrast that miserable laundry list with possible future scenarios which will require shades.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.

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