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 yearis low this week and begin its inevitable come back. Both assumptions are far from risk free.
If the Nasdaq breaks down below the yearis 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 Appleis earnings shortfall is due to macro-economic conditions beyond the companyis 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 investoris journey in tech stock investing. So far this year, itis been a disaster.
For more gruesome details of AAPLis 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, Iill 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 Appleis stock activity, visit our Apple Stock Watch Special Report.