Apple (NASDAQ:AAPL) — On Oct. 3, I suggested three possibilities for the future direction of AAPL, and on Oct. 9, at $638, I concluded that a head-and-shoulders top had occurred. I wrote:
“On Monday, the third option, a head-and-shoulders breakdown, occurred following more production problems with the new iPhone 5. Despite reduced trading volume due to Columbus Day, enough sellers surfaced to drive the stock’s price through the neckline at $655 on a breakaway gap.
“This is a classic breakdown — it just doesn’t get any clearer than this. However, a fall to $605 would not change the long-term direction of the stock (which is still up) and could present a good buying opportunity. I’ll review it when it gets there.
Thursday’s low was $605.55. After the close, Apple missed its earnings target, reporting Q4 2012 earnings of $8.67 versus an expected $8.75. The company also said it sees Q1 2013 earnings per share of $11.75 versus a prior estimate of $15.43.
Those who shorted the stock may want to take profits this morning if it opens lower. However, the stock may head even lower with its next target the 200-day moving average line at $587.