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Apple's Stock Below $580, What Is Next?

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Apple’s (NASDAQ:AAPL) stock continued its descent on Friday. In late afternoon, Apple was trading near the $578 mark, down 2.95 percent for the day, and close to 18 percent below its all-time highs of $705, though there were no major corporate developments to count for such decline—other than people waiting to buy iPad Mini outside Apple stores. This time around, however, Apple’s descent wasn’t followed by high priced stocks: Amazon (NASDAQ:AMZN) was up 0.75 percent for the day, and Pricelinine.com (NASDAQ:PCLN) was up 9.86%—the stock was responding to a better than expected earnings report.

Apple’s stock has been under pressure since unveiled its iPad Mini on Tuesday afternoon last week, when its stock dropped sharply, to below $616 level, after flirting with $634 in morning trading.

Obviously, iPad Mini didn’t stand up to the market’s expectations going into the event. In particularly, markets seem to be concerned about the price of the iPad Mini – it will retail at $329, well above competing products in a challenging industry and world market environment.

Investors have also been edgy over a mixed earnings report confirming strong iPhone sales and lackluster iPad sales at the end of last week; and the departure of Scott Forstall, former senior vice president for iOS, and retail stores chief John Browett over the weekend. What is next for Apple’s stock?

It is hard to say, as Apple traders and investors are divided in two camps: Those who decide with fundamentals and those who decide with emotions. Those who decide with fundamentals have a compelling case for buying the stock, as it is trading at a forward (Sept 2013) PE of 9.86, below Google’s forward PE of 15.30  (Dec 31, 2013).

Those who decide with emotions have a compelling case for selling it, as Apple’s new product releases do not seem to be generating the buzz they used under Steve Jobs leadership. That’s why I’m trading the stock on both sides of the market.

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