Apple (NASDAQ:AAPL) – This is a household name, and when the stock falls it makes worldwide headlines. AAPL had broken from a sideways trend in late January at around $427 to $430, and ran to a high of almost $644 early this month. It was a huge move for this triple-digit-priced stock, but many said that the earnings justified a price of $1,000 or more.
Credit Suisse has a target of $750 and S&P is at $800. But after five successive days of profit- taking, those numbers look to be a long way off. In truth, the stock has moved too far and too fast even for a stock that S&P expects for a 40% growth rate in FY 2011 and 45% in FY 2012.
Simple profit-taking appears to be the reason for the stock’s recent decline. The question then for both traders and long-term investors is, “Where should I expect to be able to buy Apple?”
Its chart gives a hint as to how low it might go, but this is a volatile performer and buyers would be wise to put in open (GTC) orders if they plan to purchase it. The Fibonacci numbers calculated from the breakout in January show that a 33.3% retracement would occur at $570 and a 50% retracement is at $535.
In between is the 50-day moving average at $559 — a price that traders will no doubt hop on just to grab a few points from a bounce. Long-term investors should plan to scale into the stock starting with a third at $570, then a third at $560, and a third at $535.