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Apple (NASDAQ:AAPL) closed above $630 on Thursday for the first time since April 9, when it hit an intraday high of $644 before beginning a six-week decline that by May 18 had knocked $115 off the share price and more than $100 billion off the company’s market cap.
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The selloff continued last month when Apple reported a rare earnings miss, but while markets tested and held the $570 level in three separate trading sessions that week, shares never fell below that key support level. “That suggests that the bears have generally failed to take over on the momentum,” said Bullish Cross’ Andy Zaky.
And “if a miss can’t get the ball to the bears court, then what can?” asks Zaky. “That sort of mentality is what could lead to a potential parabolic move in the stock. You could see a fear driven rally which generates major momentum which could in turn lead to a parabolic move. So just keep that in mind. The risk is there.”
After yesterday’s close, up $60 from the lows being pushed in July, it seems like Apple has entered parabolic territory, and sooner than expected. Last month, Zaky and everyone else was expected the new iPhone to arrive in October, but now that insider reports have the phone being launched by the end of September, stocks have begun to gain earlier than expected.
Zaky had predicted that the stock would be trading in the $700 to $750 range before the end of the year. Now he’s warning readers that the share price could hit $700 much sooner.
Zaky’s prediction, and others like it, are in part responsible for Apple’s rally. Investors are afraid that Apple will reach those heights before they’ve placed their bets. That’s why it’s called a fear-driven rally. But beware of the parabola — anyone with a little calculus under their belts knows that the steep rise to the top of a parabola is evenly matched by an equally steep decline that, in this case, could put Apple shares right back where they were trading earlier this year. I believe it was a falling apple that helped Isaac Newton understand gravity, and that what goes up, must come down.
Shares of Apple (NASDAQ:AAPL) hit a new all-time high of $648.19 per share Friday.
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