Analysis of AAPL Suggests Consolidation and Optimism

Investors seem a bit disappointed by the current lack of iPhone sales news and data. Despite the iMac announcement Tuesday and the reaffirmation of Apple as a premiere computer company and electronics firm, a period of consolidation, similar to June 2007, is in effect according to Joseph Hargett with Shaeffers Research.

"Despite the shiny new iMacs, AAPL shares are struggling today, slipping below breakeven on the session despite a wave of buying pressure across the market. In fact, the past several sessions have been troublesome for Apple stock," Mr. Hargett wrote.

"While the recent market turmoil is partly to blame, the failure of the equity to maintain support at its 10-day and 20-day moving averages, as well as support in the 140 region, speaks of at least a consolidation period for the stock (similar to the one that held AAPL in check for most of June), if not a correction from the pre-iPhone hype that swept the stock up like a hurricane."

Mr. Hargett put the "Schaffers put/call open interest ration (SOIR) at 0.69, which is an annual low. "Now, I would say that this could indicate a period of short-term weakness for the shares, but AAPL has a tendency to ignore sentiment indicators. After all, you canit fight the hype," the analyst concluded.

Even so, the bullish approach to Apple lingers. "That said, Apple will invariably rally 5% during the next week just to prove itis not a contrarian-friendly stock, as many people in our discussion boards have so clearly pointed out."

Apple stock has hovered in the US$135.00 range during trading on Wednesday.

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