$AAPL Passes ‘Death Cross’ to End Week at $533.25

| Apple Stock Watch

Shares of Apple Inc. resumed their downward trajectory on Friday, ending the week at US$533.25, off by $13.995 (-2.56 percent), on strong volume of 28.1 million shares. That's an 8.5 percent loss on the week, and the stock has officially passed the so-called "death cross."

$AAPL Chart for December 7th, 2012

$AAPL Chart for December 7th, 2012
Source: Yahoo! Finance

The bears have been having a field day with the stock, though the losses appear to have nothing to do with Apple's fundamentals. Worries about China Mobile, some margin rules changes with a minor clearing house, and selling due to likely tax law changes in the near future have all weighed the stock down. On Friday, Apple revealed that its new 27-inch iMacs won't ship until January, after the Christmas buying season.

Also on Friday, $AAPL passed the death cross, a technical trading term for a point when a stock's 200 day moving average drops below its 50 day moving average. This is often indicative of bear trend, especially when accompanied by high volume, and all manner of talking heads and pundits are discussing the import of $AAPL having passed a death cross.

One analyst, however, called shenanigans on this issues. Collin Monsarrat of Birinyi Associates told The Wall Street Journal that $AAPL has crossed no fewer than five death crosses since November of 2000, a period of time when , points out Apple shares have suffered through five death crosses dating back to November 2000.

Over that period of time, shares of Apple have increased by roughly 5,800 percent, suggesting that death crosses have not carried the same meaning for Apple that it has for other stocks.

“The data is fairly inconclusive, but if it shows anything, it is that a death cross implies better performance,” Mr. Monsarrant said. “The stock has tended to struggle for the week and month following the cross, but three months later the stock has tended to be not only up but outperform the S&P 500 60% of the time.”

So death cross, smeath cross. The reality is that Apple's stock is simply volatile. Many of its dramatic rises have been predicated on little or no news, just as many of its dramatic declines have been predicated on little or no news.

The stock is currently under the influence of several intangibles that have little or nothing to do with the company's fundamentals. Once the market works through those and Apple reports December quarter results and offers guidance for the January quarter, those fundamentals should reassert themselves, one way or another.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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Comments

aardman

Technical analysis is the stupidest approach to stock picking.  There’s no economic logic at all, it’s all mumbo-jumbo about the shapes of graphs; no different from reading tea leaves.  They’re the astrologists of the stock trading world and why the media gives them the attention that they get is beyond me.

Bryan Chaffin

Hard to argue with that, aardman, at least when it comes to Apple. There’s enough technical traders out there that there must be something to it, but it seems like voodoo to me.

ibuck

Wow, aardman, you’re giving a bad name to astrologers.

aardman

Here’s how technical analysis “works”.  If enough technical analysts proclaim “Company X’s chart has reached the dreaded perilous cliffside head-over-heels dangle so its stock price is sure to plunge”, then that meme will permeate the market and the stock investing herd will think “hey there’s a very strong buzz out there that Company X will take a dive, I better unload my shares fast”. 

One or two technical analysts can’t move the herd, it’s got to be a whole chorus of them singing the same refrain.  Ergo Mr. Chaffin’s observation that “There’s enough technical traders out there that there must be something to it.” 

Self fulfilling prophecy made possible by herd mentality, that’s all it is. 

evilgenius

It’s not completely useless. When many traders are following the rules of some game, it’s worth knowing the rules even if you don’t follow them. Use that to your advantage.

geoduck

Self fulfilling prophecy made possible by herd mentality, that’s all it is.

At what point I wonder does this ‘technical analyses’ become stock manipulation.

Robert

My Buy for 2013 is AAPL:
If you only looked at Apple’s fundamentals without knowing the name of the company,
I posit most would make the call it is a value stock.
The company trades for 12 times free cash flow, has a forward P/E of 9.44,
a PEG ratio of .63,pays a dividend, has over $100 billion in cash and plans to buy back shares.
Sounds like a value play to me, and a good one at that.
AAPL@533 is a Holiday gift.
It is also in a good agreement with:
* Morgan Stanley*
** I Know First algorithmic system**
stance on AAPL.
Good Luck to all of US!

Doug Grinbergs

Mangled sentence:

> no fewer than five death crosses since November of 2000, a period of time when , points out Apple shares have suffered through five death crosses dating back to November 2000.

Bosco (Brad Hutchings)

Wow aardman, tell us what you really think about the banishment of the AFB tea leaf smokers, errrrr stokers, errrr fluffers.

Bosco (Brad Hutchings)

BTW, if you rode enough AAPL all the way up from sub $200, you’d probably qualify as a certified moron not to have planned on the day after the election to sell before year’s end on the capital gains tax hike slash AMT mess. If your target is $800, you’ll certainly come out ahead paying the capital gains this year and missing 50 points of rebound. Except if you’re in California, where we punish investors retroactively.

John Zampier

I am in no way a stock analyst.  What I am is a techie.  And I know that Apple iOS products (their biggest products) are boring and out-dated.  iOs has barely evolved at all over the past 2-3 years.  Android now controls 75% of the smartphone market and each iOS update in hardware/software is about a year behind Android.  They still charge $100 to go from 16GB to 32GB, where every other company charges $50 for the same upgrade.  I told my friend who had a lot of stock in Apple to sell his stock just after the iPhone 5 came out and he did at $700.  Now it’s at $535, and it was at it’s low, down to $504.  Now they’ve came out with the iPad mini, which is extremely over-priced and under-powered.  Apple is competing with no one anymore. They are fully reliant on their current iOS customers that are now trapped in their eco-system.  The weird part is, they use almost the exact opposite strategy with their Mac systems.  Expect their stock to continue the downtrend through April/May when rumors of either an iPhone 5s or iPhone 6 will surface.  If it’s an iPhone 5s you can throw your stock out the window, because Apple NEEDS to bring something big to the table to regain the lead.

aardman

Not just technical analysts but analysts in general face an existential conundrum:  If you are so good at predicting stock prices, shouldn’t you be keeping your predictions to yourself and just make a killing on the stock market?  The fact that you divulge your forecasts reveals that you don’t think they’re any good, or worse, you just mean to manipulate the market to your advantage.

John Zampier

I think you’re reading into my comment a little too much.  I tried the stock market once, it’s mostly just gambling.  I always used to love when analysts attributed a rise in oil prices as a reason why GM stock fell that day.  Meanwhile the next day oil prices go up more than the last day and the GM stock goes up.  I don’t gamble. I play poker.  Most likely tech people are going to know more about tech products and the companies that produce them, because they have end product experience with them, and not like your occasional user would.  My tech experience is all in hobby form, yet I know more about tech stuff than a lot of your tech departments on college campuses and small businesses.  I’m an electrician, with a bachelor’s degree in business administration, with a passion for electronic gadgets.  I’d Apple is one stock of very few that I have knowledge on.  But I’m not going to gamble on it.  I just like that I was right about it in this case.

aardman

Sorry Mr. Zampier, I did not mean to sound as if my last post was directed at you.  I was referring to stock analysts in general.

Jake

That’s not Full Disclosure.  You need to tell us the amount and price points you purchased and or shorted the stock.  In including any option details.  Otherwise, you’ll find yourself on the wrong side of the SEC.

John Zampier

....my bad

Nik

Everyone is right at some point in the stock market, thats easy.

What is hard is a long term strategy. If your friend is now buying aapl, then hes probably on the right side of the game. If on the other hand hes shorting the stock more and it rebounds to $800 early next year, hell have lost.

So congratulations on being right today, but tomorrow might be another story. What would be interesting is if you had valid reasons to predict Aapl - but you dont. Ios is “tired” - nobody cares about that, where by nobody I mean normal people.

Look at Apples share of high end smartphones, remove all those $200 phones that do nothing but run Android and I bet that you will get to around 50/50 market share of high end handsets. Samsungs average sales price for smartphones was $180 in 2012. That should tell you something about the numbers.

I agree with the assessment that Android is on the rise, that is obvious just walking the streets. But I think its mainly a function of one vs many. And as long as Apple is expanding their user base as they have theydont need to worry. Right now NO mobile deloper in their right mind develops Android first. Its always ios first, then when that succeeds, much later, maybe, Android.

The market Apple really wants to own is tablets, and they are in a very good position with the mini there.

I also agree Apple needs to improve ios a lot but I disagree that this will have any impact on sales for at least the next year.

Lee Dronick

As Bosco says a lot of it has to do with people avoiding the increase in the capital gains tax.

Of course that doesn’t stop the cheap seat media and pundits from kicking AAPL in the head while it is down, knocked down by someone other than them. They will be kowtowing when the stock goes back up early next year.

joe

@Robert - lol your $533 aapl gift is only worth $433 now and falling like a rock lol.

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