Apple Inc. (AAPL) continues to be the main focus on everyone's screen as it continues to negatively correlate the major indexes. As the major indexes make moves higher, AAPL continues to put in new lows. AAPL has been in official bear territory as it now has lost 38% since putting in a high last September.
Congratulations if you sold high 500+'s or you've been short, or maybe you're still short, but for the non-trader, you've probably doubled down or maybe even tripled down. This is a classic example of "Catching a Falling Knife". As great as AAPL is a company, it clearly has shown evidence of not being a positive performing stock the last 6 months. I've personally never been a fan of this stock. If you profile our last two previous major bubbles (ie. internet stocks in the late 90s, housing market, etc.) AAPL has a very close resemblance to those bubbles. Here is my bubble checklist:
1) Over owned (eg everyone and their mother owns some form of the product)
2) One is willing to pay anything for (eg disregard to fundamentals)
3) A sense of euphoria (eg "Best thing since slice bread.")
If you ask yourself these three bullet points on the previous two major bubbles, one can certainly answer them with ease. Do these three bullet points sound like AAPL?
As a trade, the bearish pattern looks like it will stay intact for a bit. Since it has negatively correlated the market as a whole, time will only tell to see if money goes into AAPL if the market starts to see some form of pull-in. If this were to happen, AAPL would be considered as a defensive stock. I don't know where AAPL is going, but it's on sale. A close above $457.33 is the first step this stock needs to change direction in the eyes of the traders.
