Thursday, December 6, 2012

AAPL - Bounce or Bust?

Saw a similar chart on a twitter, so thought would recreate it with my thoughts on it. Look at the similarities between May/June lows and recent weeks. The problem with AAPL is that too many hedge funds are too deep into it using heavy leverage. When they see slightest warning signs, they tend to start liquidating together, creating this accenuated effect.  In my opinion, some of the selling may have been triggered by upcoming capital gains tax changes with Fiscal cliff. Long term investors are trying to take profits now than wait for 2013.  I think the fundamentatals of the company are still very sound. Company is still adding piles of cash to its balance sheet. That said chart looks bearish with potential H&S formation. With its biggest ever quarter coming up it has potential to surprise a lot of bears in January. If you long this stock, keep October lows as a stop on this.

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