After flirting with the $500 level on Monday, Apple shares tumbled 3% on Tuesday to $485.92. That was Apple's lowest market close since February 2012.
Apple is now down over 30% from its September high of $702 and down 9% year-to-date. Most notably, the stock has diverged from the broader market; the S&P 500 (GSPC) is up more than 3% so far in 2013 and sitting just below a 5-year high.
Apple’s slump has come as a shock to many investors -- certainly the sell-side analysts who were talking boldly just a few months ago about $1000 (plus) price targets and $1 trillion market caps. But Apple’s fall from grace did not surprise Barry Ritholtz, CEO of Fusion IQ and author of The Big Picture blog.
In late November, Ritholtz, a longtime Apple shareholder and self-described “fan boy,” told The Daily Ticker the stock could drop to $500.
Looking back, Apple was “over-owned” -- notably among hedge funds, where it was a top 10 holding of 800 funds -- and “over-loved,” Ritholtz tells me in the accompanying video. “Some of the refusal to even consider the possibility of a correction in Apple is a stark reminder of the dangers of allowing emotions to drive your investment decisions.”
Looking forward, the money manager and blogger says Apple could fall to as low as $350 based strictly on technical indicators.
But Ritholtz stressed that’s an “outside possibility” and says the stock is setting up as a “bear trap” ahead of its earnings next week.
“I’d rather not be short here,” he says. “I’m not excited about being long but there’s such risk this thing could explode to the upside.”
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