Apple Inc. (AAPL) — AAPL stock succumbed to a high-volume sell-off on Monday. Shares were down as much as 6.4% in the first hour of trading, but recovered some of those losses to close off 3.3%.
A number of reasons were cited for the selling. There was the general market weakness, of course, which hit the tech sector particularly hard. And Morgan Stanley (MS) recently said it would be trimming 1% of its position in AAPL stock. Then there’s the antitrust lawsuit from 2005 regarding iTunes that’s set to go to trial today and could cost Apple up to $350 million in damages. And CNBC reported that the big initial drop was the result of one large sale.
On the other side of the ledger, Barclays PLC ADR (BCS) raised its price target on APPL stock by $20 to $140 on Monday. And Cantor Fitzgerald reiterated its “buy” rating and $143 price target.
The selling was also likely due in part to good, old-fashioned profit-taking. From its April 2013 low below $55, AAPL stock surged more than 120% to a split-adjusted all-time high of $119.75 on Nov. 25.
In early November, shares broke above their upper bull channel resistance line and then reversed under it. The channel, which began in April, was narrow but stable until that break.
Monday’s high-volume sell-off violated support at about $114, suggesting that the selling will continue until reaching the 50-day moving average at $106.
I recommend using this weakness in AAPL stock to buy shares between $100 and $106. Brand loyalty is extremely high, and analysts’ median target is $120.
