The Strategist

Has Apple been afflicted by the "curse of the Dow" ?

08/05/2015 - 14:02

Unable to meet investor’s expectation, shares of Apple Inc have hit their six months low. Read on to know its movement analyses so that you can make a pile irrespective of whether the shares rises or falls.

With Apple’s quarterly results disappointing analysts, the shares of the iPhone maker has been lying in the rut and have fallen to their 6 months low of $113.25 on 04-08-2015.
This fall in the price of its shares have wiped out nearly $100 billion in its market value. For Tim Cook, its CEO, it means that his stake of more than 111 million shares which were worth $15 billion at its peak, have now depreciated to $12.76 billion.
The fall in Apple’s shares only shows to go that even through the stock was impervious to pains during most parts of the last two years, it is also vulnerable to weakness.
"When you get a stock that is over-owned it’s difficult to find that incremental buyer," said Wunderlich Securities’s chief market strategist Art Hogan. "It’s having its own momentum meltdown."
The movement of its shares have made the company's shares fall far below their 200-day moving average, which is a measure of the long-term trend in the stock. Shares closed at $114.64 on Tuesday. This week's drop below the moving average exacerbated selling sentiment.
"For a lot of technical traders that was a sell sign," said Channing Smith, managing director at Capital Advisors Inc, Tulsa, Oklahoma.  "The Apple ecosystem has never been stronger but we are in a very mature cycle. We think Apple will be a good stock, not a great stock going forward."
Investors expected more volatility in its shares and 2.13 million Apple’s shares were traded on 04.08-2015, its third-most active day this year.
Giving further analyses to the movements of its shares, analysts at Bespoke Investment Group of Harrison, New York, noted that when Apple’s shares slip below its 200-day moving average, it tends to weaken a bit further, for at least a week. Although it does make a stronger comeback.
Upto now, Apple’s shares had escaped the Dow Jones Index so called curse which causes companies' shares to rally in the months leading up to their addition, but underperforms in the months that follow.
The disappointing results of the fourth-quarter along with Apple missing iPhone sales targets, have caused its shares to hit rock bottom. This is also reflective of heightened investor expectations and is a pointer to the realisation that the much hyped Apple Watch may not in fact be a big catalyst as some people had hoped. Although fretting about the latest Apple products are common in investor circles.
Douglass Kass, the president of the Seabreeze Partners Management Inc hedge fund, opines that investors and analysts will be hard-pressed to put their finger on factors that translate to sales in Apple.
"At the very least, sales and profit comparisons will likely grow increasingly difficult for Apple, both absolutely and relative to analysts' expectations," said Kass. He had briefly shorted the stock as it fell, and had covered that position, in addition to selling bearish and had put options on those he was holding, as the shares fell.