Exploring Apple's Recent Downtrend

Apple Inc. AAPL has been on a downtrend since the beginning of December. After rising throughout the year without any major slumps, the stock hit a $119.75 high on November 25 and since then has drifted lower.

Toni Sacconaghi, senior research analyst at Sanford C. Bernstein, recently addressed Apple's downtrend on CNBC.

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What Is Causing Apple To Downtrend?

“I think there [are a] couple of things going on. Apple has added over $100 billion in market capitalization since it reported earnings in October. So clearly you have had really strong gains and some investors are taking profits,” Sacconaghi said.

“I think, in addition to that there has been jitteriness in the marketplace around consumers, around global economic outfits, etc.”

What Does This Mean For Investors?

Sacconaghi said, “Apple’s investors struggle with [the questions] ‘Can they beat expectations? Will results be good enough?’”

“So as we get closer to earnings for Apple in January, investors are wondering, ‘Look, should I take my profits? Can they really deliver results?’ So, we are going to top the highest end of expectations to continue to propel the stock.”

Can Anything Drive The Stock Between Now And January?

When asked if there is going to be any other catalyst that will drive the stock before Apple declares its quarterly results, Sacconaghi said, “There will be reports on how investors believe and how market research firms believe Apple did through the holiday season, but ultimately it's going to be the results and it will not only be the volume, it will be the margin.”

“I think one of the big debate issues around Apple is whether it can benefit from the larger screen phones, which have better margins and much richer configurations.”

Apple closed Tuesday at $114.12, up 1.5 percent.