Polishing Apple's Profile for 2013
Apple failed to hold its 200-day simple moving average then at $590.33 on Nov. 2, which accelerated its downside momentum. At the market's Nov. 16 lows, Apple's low was $505.75.
On Nov. 21, I wrote Santa Claus Rally Eyed for Online Leaders Apple, Amazon and Google with Apple at $560.91, and my suggested buy-and-trade" strategy was to book profits on strength to the stock's five-week modified moving average, then at $586.46. This test occurred on Nov. 26.
On Nov. 27 I wrote, Apple Wakes Up to a Downgrade to hold from buy. Apple continued to have some upside to just above $594 on Nov. 29 and Dec. 3, but then turned lower in a move to as low as $501.23 on Dec. 17.
On Dec. 7 I wrote How to Trade Apple's Bungee Jump noting that the day before with the stock as low as $518.63 Apple was upgraded back to a buy rating. Even with the additional weakness to Dec. 17, the stock did rebound to $555.20 intra-day on Dec. 7.
The fundamentals for the stock market deteriorated further as 2013 began on Wednesday when the market outran its valuations and as the yield of the U.S. Treasury 30-year bond rose to 3.042% from 2.951% on Monday.
At www.ValuEngine.com we show that 45.3% of all stocks are undervalued with 54.7% overvalued. We show that 15 of 16 sectors are overvalued with the oils-energy sector the cheapest at just 0.15% undervalued. Sectors overvalued by double-digit percentages rose to nine; construction by 24.5%, consumer staples by 19.3%, industrial products by 17.7%, finance by 15.2%, retail-wholesale by 15.0%, transportation by 14.7%, business services by 13.7%, computer & technology by 12.9% and aerospace by 12.8%.
Compared to the market and the computer and technology sector Apple is fundamentally cheap. Apple has a buy rating according to ValuEngine with fair value at $606.94 making the stock 9.5% undervalued. Apple has a favorable price-to-earnings ratio at 12.5. The one-year price target is $581.80. Fundamentally, Apple begins 2013 as a buy-and-trade candidate.
My proprietary analytics show that Apple has an annual value level at $510.64 suggesting that even if the stock falls below $500 in 2013 it will come back to $510.64 as a pivot, or magnet.