Apple Shares Formally Enter Correction Mode

Apple Inc. (NASDAQ: AAPL) may have been reiterated with an Outperform rating with a $750 price target this morning by Credit Suisse, but things are not going the way for Apple shareholders. In fact, Apple has formally entered “correction” territory as shares are now down 10% from their recent all time highs. While common elsewhere, this is a rare event for Apple.

Apple peaked at $705.07 just back on September 21. Now shares hit a low of $628.00 this morning. For the formal correction mode to kick in, a 10% correction from the peak would have been $634.56 on Apple shares. Commit that number to memory.

Does a 10% correction really mean that much? Maybe only on a psychological basis. The iPhone 5 has been an overwhelming success on demand, but Main Street is now criticizing every little flaw that comes up with this company. Even Tim Cook is criticized as not being able to fill the shoes of Steve Jobs. Who else could have? Those shoes were too big for anyone to entirely fill, but Apple shares have risen handily since the death of Steve Jobs, even if you take the 10% correction into consideration.

The chart recently dipped under the 50-day moving average. We noted on that event that this happened recently as well and that the 50-day moving average has historically acted as support rather than as resistance. Will that be the case ahead? We will see. Analysts think so as the consensus price target on Apple is now almost up at $780.00 for the stock. That is another $150, or almost 24% higher, versus today’s share price.

Can the drop continue? Sure. The 50-day moving average is now $658.06 and the 200-day moving average is $572.12.

JON C. OGG