Can you see Apple (AAPL) under $60?

“Can you see Apple (AAPL) under $60?” Zack Bass asks for Seeking Alpha. “I can, but first we have to deal with the next level of support, which is 74-ish. What really makes me a believer is how easily we broke through 85 yesterday. You know, 85 represents both long-term support, and an important psychological level. That’s because Apple hasn’t been below 85 since January 9th of 2007, the day Steve Jobs introduced the iPhone to the world.”

“How can this be? Apple’s fundamentals are strong, right? Yes they are. But that has absolutely no bearing here. Apple is simply falling with the rest of the market, and so long as there’s no confidence in the market, it will continue to fall. I suppose you could argue that Apple has taken more than it’s fair share, but trying to argue that point with the market is an argument you can’t win,” Bass writes. “You can only accept it for what it is.”

Bass writes, “Some have suggested that the incoming Obama administration announce its intentions, or at the very least work with a transitionary plan with the Bush administration. But that could have the effect of diminishing the Obama administration’s effectiveness if the economy should significantly deteriorate before he actually takes office. And I don’t think they want to cozy up with Bush in any shape or form. It goes against all historical precedent and may incite a public relations nightmare.”

Bass writes, “If we fall to the 666 level on the S&P, then this would equate to the next level of support for AAPL which would be in the 62-64 range. Although I find the support in this area to be quite vague, it wouldn’t be a stretch to see the lows of 2006 provide the next and hopefully final levels of support at 57 and 53. I know these numbers sound crazy, but who would have thought Apple would have lost over 60% of its value since it’s all-time high of 202 just 11 months ago? Also, if you recall, not more than a couple months back, we had respected Apple analyst Gene Munster reiterate his price target for Apple of $250! So what’s crazier now, a 300% gain to hit Munster’s target, or a 25% decline to reach 60?”

Full article here.

We live in interesting times.

39 Comments

  1. It’s called a Post Real Estate Bubble Recession.

    People are paying most of their income to mortgages, limiting disposable income for other items such as computers and electronics.

    This trend will continue for many years (as people have long mortgages) until several things occur.

    1: More well paying jobs
    2: Housing glut is down to a few months supply
    3: Increase in population

    The US economy is currently undergoing deflation, where prices getting lower because of low demand, because not many people have a whole lot of disposable income.

    When the Democrats take full control of the government, (*shudders at the thought*), they will certainly increase the money supply substancialy to bail out everything and everyone. This will cause a sudden and dangerous HYPERINFLATION, where investments get wiped out and we all pay more for everyday items and including gasoline, which the Dems want to promote “clean” alternatives.

    My advice, and Bill Gates has already put 2 billion dollars in, is buy Treasury Inflation Protected Securities and/or I-Bonds. Timing is essential, so read up on it before January when the auction is held for individuals, or you have to go to a broker. So when hyper-inflation hits, you buy those.

    Or else you’ll watch your saving deteriorate anywhere between 8 and 20 percent PER YEAR due to inflation and gas reach $5 per gallon early spring.

    Of course the gold bugs are predicting $2000-$3000 per ounce, but when it gets that high, who’s going to buy large amounts?

    By the way Warren Buffet has bough huge amounts of ConocoPhillips, “skating to where the puck is going to be”

    If your asleep of course your going to lose money.

    Apple? Well, wait for the economic rebound when it occurs.

  2. A fun exercise:
    1. Subtract Apple’s Cash & Short-term Investments position from its market cap to determine the market value of the enterprise.
    2. Divide by number of shares outstanding to get market value per share.
    3. Divide by consensus projected 2009 earnings to get adjusted P/E.

    You get about 8.

    In 2002, this value was around 5. That’s the lowest I ever saw it. Over the next five years the share price of AAPL went up 20x. And in 2002, Apple was bleeding and hurting bad. Now it is growing like crazy in the face of the worst slow-down since the 1930’s, if not since the Civil War.

    So, best case scenario: the economy picks up a bit, and Apple continues to grow. AAPL goes up 20x from here, and in five years it reaches $1,600 per share.

    I’m only half kidding.

  3. You filthy American pigs have elected a man who will destroy your country. The capitalist pigs on Wall Street are busy establishing the value of America during his administration. They see great gloom and doom when The Chosen One takes control of your country.

  4. Bass writes, “If we fall to the 666 level on the S&P;, then this would equate to the next level of support for AAPL which would be in the 62-64 range…”

    Funny, the Chinese lowered their prime lending rate to 6.66% instead of in quarter or half points like everyone else.

    Getting ready for the “Beast” to take the Oval Office I assume.

    Buy gold and run for the hills.

  5. I’m not looking at where AAPL is going, but rather where the markets are going. Right now they are heading DOWN and I can see no reason for that trend to reverse right now. Bush certainly isn’t doing anything to restore confidence for consumers, improve unemployment or reduce home foreclosures.

    And then there is the End of Year sell off where a lot of investors will dump stocks at a loss to cut their 08 taxes.

    Watch the DOW. It went into the 7000’s – did we see a mass of buying? We might not see it when it goes into the 6000’s. I’ve already read that 5,700 will be the low point. That now seems possible, especially if the Big 3 auto makers continue to have problems, or file for bankruptcy.

    The sad fact is that the market is in sad shape and isn’t going to get any better for a while. That leaves AAPL and other good stocks with risks of going a lot lower.

    I’m staying away from stocks until the market improves AND there is a reason for that improvement. Without a reason for that improvement I can see gains being only short term.

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