Thursday, 16 February 2012

Last one out is a rotten AAPL

All good things come to an end, and the recent rally in the Cupertino based technology mammoth is no exception. Apple reversed yesterday almost $24 from its most recent highs, down to $502.08. The main culprit seems to be a piece of news according to which Apple iPads are the subject of a trademark infringement in the Chinese mainland. It seems that the sino company Proview International Holdings is the holder of iPad trademark on the Chinese mainland and is currently seeking a ban on imports and exports of Apple products.

Tip of the iceberg

While this matter is most likely going to get settled sooner or later (depending on the amount of money Apple is willing to put on the table), the consequences of this may extend to the whole market. As reported in a ZeroHedge article, the technology giants stock was responsible for more than 90% of the daily NASDAQ gain. So, if one stock is prodding the entire market, what happens when the widening of the value gap stops and an imminent reversal takes place? 

Another thing to keep in mind is the extremely high institutional ownership of a Apple stock. I would bet the farm that most of these are hedge funds or high portfolio turnover mutual funds, with extremely tight stop losses, just waiting to flip flop and short it down to $420. And as you know, if Apple goes down, the market has no choice but to follow. 


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