Whatever it is it's specific to Apple as they are way under performing the market... so I would at least take the cliff off your list. I think the Fiscal Cliff is a big part of what is happening to Apple. And, if you look at, not the broader market, I suspect you might see something similar in any stock that has large capital gains over the last few years.
Why? It is likely that the capital gains rates and dividend rates will go up even with an agreement in Washington (not getting political here). Right now, capital gains are taxed at 15% and are scheduled to go up to 20% . However, capital gains in excess of $5,000,000 would be taxed at 25%. And, it is possible that they could go higher. So, if you are an institutional investor sitting on large capital gains, why not sell now and be taxed at 15% and then turn around and buy back in. The Wash Rule does not come into play since it is a gain and the IRS is happy to collect your money. Also, there is now hurry to buy back in since the technicals have suggested that Apple was going lower.
I think we continue to have this irrational (from a fundamental investors point of view) selling pressure to a point. Then, the buyers and re-purchasers come back into the market by storm as soon as the momentum swings north. Time frame is hard to judge but the Fiscal Cliff selling could potentially continue until the end of the year. Most, though, should clear out before then and some kind of spark to the upside would instigate some serious buying and I think as bad as things look now, January will be the absolute reverse. |
