Apple's momentum 'meltdown' bites investors

Tue Aug 4, 2015 5:12pm EDT
 
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By Saqib Iqbal Ahmed

NEW YORK (Reuters) - Has the "curse of the Dow" finally caught up with Apple?

Shares of the iPhone maker have been in a rut since posting disappointing quarterly results in late June, falling to a six-month low of $113.25 on Tuesday.

The recent declines have wiped out nearly $100 billion of Apple's market value - about as much as fellow Dow components Boeing and McDonald's are worth in total. For CEO Tim Cook, it means his stake of more than 111 million shares is now worth about $12.76 billion, compared with nearly $15 billion at the peak in late April.

The dropoff represents a notable bout of weakness for a stock basically impervious to pain for the better part of two years.

Strategists pinned the sell-off on the steady run in the shares, as the stock has gained more than 137 percent since hitting a low in April of 2013. In addition, more than 5,700 different funds already own the shares, according to Morningstar data. With Tuesday's declines, the shares have dropped 13 percent over the last 11 trading days.

"When you get a stock that is over-owned it’s difficult to find that incremental buyer," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "It’s having its own momentum meltdown."

The declines have left the company's shares below their 200-day moving average, a measure of the long-term trend in the stock. Shares closed at $114.64 on Tuesday.

The last time it closed below the 200-day moving average, in November 2012, the stock was in the midst of a swoon that lasted several more months, finally bottoming out in June 2013.   Continued...

 
An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, July 21, 2015.  REUTERS/Mike Segar