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January 27, 2010

Can Apple ( AAPL ) Stock Fall After the Tablet Computer’s Release?

Filed under: Uncategorized — Tags: , , , — Dan Passarelli @ 5:00 pm

You Tablet, iTablet, We All Tablet for the Apple iPad Tablet Tech heads and computer geeks the world around will focus their attention toward San Francisco, California on January 27, 2010 with breathless anticipation toward Apple’s ( NASDAQ: AAPL ) unveiling of its new tablet-style computer.  With Steve Jobs making a run for world-wide domination of media (online music, online videos, books, movies, and games) – is there even the slightest chance that the stock could fall?

Technically Speaking
When looking at the potential for a stock as it heads into a news event (like the release of the Apple tablet computer), it is often best to take a look at technical performance. One can not deny how solid Apple performed in 2009, does this past performance indicate that the coming 11 months will be the same? Well, let’s take a look.

Since hitting a 2009 nadir in the 78 region, the stock has gained more than 150% – pretty good performance. However, could this performance be setting up a bear run? Well, the stock is in uncharted territory, trading in rarified air in a historical perspective. The closest potential historic support for Apple is its 50-day moving average. This trendline has done a decent job helping usher the stock higher, and the announcement of the Apple tablet computer should help strengthen this trendline’s resolve. With the equity in the process of rebounding off this trendline, one could expect technical history to repeat itself.

Raging Bulls
That said, is there any reason to believe the stock could drop? Any reason for Apple to fall after releasing its new tablet computer? Perhaps, stick with me here. Researching the stock a bit we find that a massive 40 analysts follow the equity. What is even more massive is the amount of “strong buy” rankings Apple receives – 30. Moreover, nine of the remaining analysts rate Apple a “hold” or better. With analyst coverage this bullish, there is little room for the stock to benefit from upgrades. In fact, an upgrade from the lone bull would be like dumping a tablespoon of salt in the ocean … in other words, the impact would be minimal.

With very little chance for upgrades, the downgrade potential is massive. What if the Apple tablet computer fails miserably? What if analysts hate the Apple tablet computer? What if the public doesn’t want to pay the money for the Apple tablet (perhaps not likely, but…)? Could any of these actions lead to downgrades? Yes. Could these downgrades act like an anchor to the stock? Yes. Of course, it is nice to see various levels of technical support residing under Apple shares. Not only is there the stock’s 50-day moving average, but it also could rely on the 200 level, its 10-week moving average (which is slightly below the shares), or its 10-month moving average (much lower than the current position) if need be.

At one point in time, people referred to Apple as a recession-proof stock. Is this the case? Perhaps. It certainly seems that analysts and investors feel the stock is bulletproof. I guess we will find out for sure.