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.
John Williams, of Shadowstats, has warned that real earnings continue to literally collapse. Also note that the above graph illustrates consumer sentiment still remains below the 2003 market crash levels. Williams’ graphs are excellent depictions of what a collapsed economy truly looks like. They also show why the middle class in the Western world continues to be destroyed. Williams also shocked KWN with his graph showing real earnings tumbling, now nearly 50% below 1973. Here is what Williams had to say: “The latest consumer earnings and credit numbers show ongoing structural deterioration in consumer liquidity. With lack of positive, real (inflation-adjusted) growth in income, there can be no sustainable growth in real personal consumption (71% of GDP).”
In what may be recognized as a prophetic call within a few years time, legendary gold investor Jim Sinclair (also known as Mr. Gold), issued a dispatch this month entitled
