Barron’s: Apple falling through $150 was a big red flag

From Jacob Sonenshine’s “Apple Stock Has Broken Down. That’s Bad for the Market.” posted Thursday by Barron’s:

Since early November, Apple shares have found a bottom at $150 each, an amount that drew investors in. They didn’t buy, though, at $150 this time.

And their decision to stay on the sidelines makes it much tougher to know where that bottom price is — and much easier to think that stock will just keep dropping. Shares are already down more than 21% for the year.

No wonder if investors are unsettled. They think: If Apple can’t hold the line, how can the broader market fare much better or even as well?…

apple red flag 150Apple’s decline speaks volumes about market sentiment.

Usually, when markets are concerned about the economy and earnings growth, the stocks that get hit the hardest are the ones that see a rapid decline in earnings expectations. Apple’s profit stream is seen as high quality and consistent.

The fact that Apple is getting hit so hard is a red flag that investors are waving: One belief could be, in serious numbers, that economic demand could falter enough for shoppers to think twice about buying that new iPhone, or iPad, or Mac.

“It is a troubling sign when investors sour on best of breed names in an already difficult tape,” wrote Nicholas Colas, co-founder of DataTrek. “AAPL’s move today is one more reason we remain very cautious on stocks.”

Apple is top name—and has been. And with that ranking and reputation comes the big role it plays in the broader maker. Keep an eye on the tech giant. It can tell a lot about where things are headed.

My take: I take little comfort in this.

5 Comments

  1. Greg Bates said:
    Comfort: Buffett bought $600 million in Apple this spring and said he would have bought more except the price went too high, saying specifically he couldn’t tell how much he would have bought had the price stayed low. I bet he is starting to buy again.

    The journalist says that the market has been pushed down by anxiety. No, it was pushed down by rising inflation and the Fed raising interest rates with plans for many more hikes to slow things down. Nothing wrong with that but it pushes stocks down in the short term. Over the longer term, inflation will drop and later so will interest rates (though likely not to as low as they are today). And Apple will rise again.

    Solution: think like Buffett: Apple is on sale, start buying and try to never sell. Works for him. Does anyone need to do better?

    8
    May 12, 2022
    • Jerry Doyle said:
      Thumbs up brother Greg B! It’s all about inflation and the Fed’s ostensible aggressive strategy to attack inflation. Prices are skyrocketing everywhere for most everything. It’s like a contagion and I question seriously if the many increases are predicated on need to increase vs. greed to increase.

      2
      May 12, 2022
    • Fred Stein said:
      Yup, thanks Greg. Buffett is smart. It’s good to quote him. Jacob S. just rehashes nonsense from others

      The market may be over reacting right now. We’ve seen it before. It’s about the uncertainty around interest rates this time. That’s OK since Apple’s P/E will compare favorably against interest rates for quite a while – And especially at lower AAPL stock prices.

      0
      May 13, 2022
  2. Robert Paul Leitao said:
    In my view, there’s rarely a “bad” time to buy Apple. Apple’s been among the last of the mega caps to get pummeled in the rerating of equities prices and I expect it to be among the leaders when share prices eventually change direction from south and again move north. All investors need to perform their own due diligence and make decisions based on their personal circumstances. A market recovery may take time. The time will pass anyway. Quality matters. How do you desire to be positioned when share prices change direction from south and again move north?

    0
    May 13, 2022
  3. bas flik said:
    public spending relies too much on debt nowedays. rising interest rates can not be sustained. anyway inflation of 8-10 % will not be tempered by 0.5 interest rate hike.
    this inflation is worldwide because China messed up with Lockdowns and Russia by waging wars. FED is not able to control inflation worldwide.

    3
    May 13, 2022

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