“I’ve really enjoyed my subscription to The Cheap Investor,” notes Marc C. “I just wanted to know if you would buy Apple under $100 here.”
In short, no…
Even after the 7:1 split, Apple is still over-extended at historical resistance. It may seem like a steal with an 85% haircut, but it’s not. It’s still over-extended with no new catalysts to push it higher. News of the split, dividends, iPhone and buybacks has already been priced in, near-term. But what’s going to send it through historical resistance right now?
Analysts at Stifel may disagree, noting it could hit $110 a share.
But we still have an over-extended move on shares of Apple at historical resistance. Also, “the previous three Apple splits – on April 22, 1987; April 19, 2000; and Feb. 11, 2005, all were followed by tops within the next three to 10 trading sessions,” reports Barron’s. “Within a month of the split, Apple’s stock fell back to its 50-day moving average.”
Apple needs to pullback before we’d even consider buying it. Just because it’s under $100 does not make it a buy. The stock is up too much, too soon. It needs to pullback. When that happens, it’ll be a great buy…
Look at this chart.
Can you honestly tell me you’ll rush out to buy at these oversold levels, at these historical toppy levels? Come on.