Apple’s shares have been hammered of late, especially yesterday, after a firm raised margin requirements on the stock. But this is not an isolated “bad day of trading” for Apple. The stock hit a peak of $705 per share on September 21st, after crazy speculation drove the stock to ridiculous levels. Since then Apple has been spiraling downward, with occasional bounces, as investors (mistakenly) buy shares thinking they are oversold. The so-called “death cross” where a stock’s 50-day moving average crosses below its 200-day moving average, would spell further downside for Apple, with the shares already down $160 points or over 22% (a 20% decline is considered bear territory). We are basically at this crossover point – the 50-day MA is sitting on the 200-day MA right now:
I would be shocked if Apple does not continue to decline, forcing the 50-day to cross below the 200-day, within the next few trading sessions. Fundamentally, Apple no longer has Steve Jobs to hold the creative talent together, and drive the creative process. More importantly, he was the “polish” that made (past tense) Apple’s products so visually appealing. Without Jobs, talent will leave (brain drain), and the quality of future products will wane. It is just a question of time before Apple becomes like so many other high-flying tech stocks (read Microsoft), and becomes an also-ran. The true talents at Apple will leave (are leaving now) to form new, smaller, more creative, more innovative, more efficient, faster growing companies that will be the next Apple. This process will certainly take years, but we are definitely on the path to seeing Apple fade. Investors should consider this big picture certainty before plunging into Apple, even after large price declines.