Apple has had a huge shift in sentiment over the past couple of years. The trading strategy started becoming increasingly momentum-based at the beginning of 2012. From a slow climb in 2010 and 2011, the trading strategy became quite aggressive for many investors and institutions throughout 2012.
Once the momentum stalled, many short-term investors altered their trading strategy in Apple and exited the stock en masse.
Following the huge sell off over the past year, the question people ask us; is this the time to buy Apple?
Technically, Apple is sitting on an area that could provide some support. This weekly chart also shows the 200 week moving average at $370, right in between he value area of $350-$400.
This does not mean one should buy Apple based solely on this possible support, but it is an indication that others might begin accumulating Apple as part of their trading strategy and is worth considering.
More importantly, the value of Apple is now quite attractive. On a price-earnings ratio, Apple is actually cheaper than Dell Inc. DELL. Which stock would you rather own, Dell or Apple?
Of course that is a simplistic form of analysis, yet one should take into account that the stock is now quite cheap. One positive shift that management has begun is becoming more proactive in holding up the stock price through capital allocation that favors shareholders.
With the advent of a substantial dividend yield, this will bring in income investors as part of their trading strategy as well as technology investors. With the price being quite cheap, the trading strategy for value investors might possibly begin to make Apple attractive as well.
Now we’re talking about several different kinds of investors all being interested in Apple. This might be the sign that a floor in the price of the stock is close at hand.
Don't forget however that part of any good trading strategy is determining a possible catalyst. For company like Apple, this is the introduction of new products. CEO Tim Cook on the earnings release commented that new products would come out, but not until the fall.
This might put Apple stock in a trading pattern until the summer when rumors and hints of new product announcements start to rise. At that point, the trading strategy of momentum investors might kick in and we could have a catalyst for a substantial rise in the price of Apple.
If one is willing to hold onto the stock through some volatility, this area might offer potential value for a possible move up in the stock price later this year. However, if the products introduced disappoint the market, we could see a resumption in the sell off.
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