Tags: Apple | Drop | 325 | Fails | Hold

Apple May Drop 13% After $325 Fails to Hold: Technical Analysis

Monday, 20 Jun 2011 09:42 AM

Apple Inc., which is lagging behind the Standard & Poor’s 500 Index in 2011, is at risk of falling 13 percent now that the stock closed below $325, a level where investors had stepped in to buy this year, according to Jim Stellakis of Technical Alpha.

The maker of iPads, iPhones and Macintosh computers dropped as much as 1.8 percent to $319.36 Friday, the fifth time in 2011 that the Cupertino, California-based company slipped below $325 intraday, Bloomberg data show. Unlike the four prior occasions, including Thursday, the shares didn’t climb back above that threshold by the end of the day.

Friday’s close at $320.26 suggests a deteriorating trend that may push the stock down to $280, Stellakis said from New York. Apple slumped even as the S&P 500, the benchmark measure of U.S. shares, rallied as much as 1 percent.

“Investors’ attitude towards the stock is changing, in a negative way,” said Stellakis, who advises clients to make investments based on price charts and trading patterns. “That’s the line in the sand that shows people who thought the stock was worth buying at $325 are not there anymore.”

Apple is lagging behind the market after Steve Jobs, who transformed the money-losing computer maker into the world’s third-largest company by market value, announced his third medical leave in seven years in January. The stock is down 0.7 percent since the end of 2010, trailing the 1.1 percent gain in the S&P 500. Except for 2008, Apple beat the measure every year since 2002.

The stock has surged 310 percent from its low on Jan. 20, 2009. Stellakis said that since then, it has traded in price ranges two prior times: from September 2009 to March 2010, with support at $185, and from April to September of 2010, with support at $232. In both cases, the stock rallied after holding above the support levels.

The drop below its current range marks the first time since 2009 that investors failed to buy at the support level, said Stellakis, who started Technical Alpha in February 2010 after working as a strategist and trader at Touradji Capital Management LP and Millennium Partners.

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