Apple Bears Come Out of the Woodwork

Includes: AAPL, QQQ, SPY
by: Andy Zaky

[Editor's note: A section of the article which claimed Craig Berger predicted iPhone sales would fall 40% has been removed. Berger predicted production, not sales, would drop. The title has also been adjusted.]

Apple (NASDAQ:AAPL) is down over 2% in early trading on what seems to be various negative news stories. First, the broader market is seeing significant pressure on negative sales data out of Wal-Mart (NYSE:WMT), turmoil in Libya and concerns that rising oil prices could potentially derail the so-called jobless economic recovery. The NASDAQ 100 (QQQQ) is off nearly 2%.

Yet, on a day of broad negativity, the regular Apple bears are coming out of the woodwork. Namely, a Chinese manufacturer claims that the iPad 2 has been delayed for several months according to a report at Bloomberg. Interesting how these news pieces happen to always come out on the same day we have broad market concerns and a sizable sell-off in the NASDAQ and S&P 500 (NYSEARCA:SPY).

Yet these so-called delays out of China very seldom materialize into actual delays, and most of these "reports" are extremely subjective and used as news pieces to try and make sense out of these run-of-the-mill profit taking sessions.

The real news today: Apple is down over 2% after bouncing exactly off of the 50-day moving average at $338 as investors finally take profits off of this QEII-driven rally. Apple has held the 50-day moving average well since September and it forms significant support for the stock. Investors should be very mindful of how Apple closes today and whether it can hold this key support level over the next few trading sessions. If Apple loses support at the 50-day moving average, then the next major area of support stands at $320 a share.

The market hasn't seen a correction in over seven months now, so investors shouldn't be shocked if the markets finally undergo a much anticipated sell-off. Moreover, if we do see a correction off of these levels, expect to see significant pressure in Apple as investors take profits in the biggest winners. This shouldn't be viewed as a negative, however, as it will open up significant buying opportunities and a chance for the stock to take a breather after a huge run from $240 to $360 since August.

Apple will likely see $450 to $500 sometime within the next year, but the stock and the broader market needs to take a breather before making this next move higher.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.