While the surge in retail sales during Black Friday and Cyber Monday boosted retailers, Apple Inc.’s (AAPL) shares dropped 3.3%. While analysts continue to look for a plausible explanation, Apple spiraling down to a three-month low was an overhang on the market.

Monday’s price represented the steepest drop in three months, while share volume registered a massive rise. During the morning session, over 6.7 million shares were traded within a minute, leading to a 3% price drop which worsened in the mid-afternoon trading session as the stock tumbled 6% to $111.27. However, Apple recovered slightly from there, closing at $115.07, or down 3.3% ($3.86). Notably, Apple shares have been trading low since Nov 26, when it inched up 1.2% to $119.00, backed by traders’ expectations about its Black Friday weekend sales.

Going by the market reports, one of the reasons that Apple stocks plummeted was because Morgan Stanley (MS) lowered the rating of the U.S. technology sector to “market weight.” According to reports, weight on Apple was also lowered to 3% from 4% as investors were encouraged to curtail position in the company.

Further, reportedly, the sudden decline could be a result of high frequency trading (:HFT), in which large volumes of shares are traded through computer algorithms at a rapid pace. In addition, some analysts have speculated that heavy selling pressure in the technology sector could be the result of the downward trend in oil and energy shares. Investors could have liquidated their holdings in technology and other sectors to free capital for oil and energy instead.

It is also believed that softer sales during this year’s Black Friday weekend as against the last might have affected technology stocks like Apple, GoPro, Inc. (GPRO), Garmin Ltd. (GRMN) and retail companies like Best Buy Co., Inc. (BBY) and Alibaba Group Holding Ltd. (BABA). Since consumer electronics makes up a large part of retail sales during the holiday season, especially the Black Friday weekend, lower consumer spending (down 11% from last year according to the National Retail Federation) may have affected the iPhone maker.

However, we remain hopeful about Apple’s growth prospects. Though the stock may have slumped yesterday, we believe the upcoming launch of Apple Watch will boost share prices. In addition, we believe that strong sales of the new iPhones (6 and 6 Plus) will be important drivers in fiscal 2015. Since their release in September, Apple set a new record by selling over 10 million units in the very first weekend.

The bigger screens of the new iPhones are comparable with those of phablets offered by Samsung, HTC and LG. The company intends to sell the new iPhones in approximately 115 countries by 2014-end, making it the fastest roll-out in the history of the device.

We believe that iPhone sales will continue to benefit from the Apple-China Mobile partnership in the Greater China region despite the pricing pressure. Moreover, expanding the carrier base in other countries will help Apple to aggressively sell iPhones, going forward. As a result we believe that any dip in prices could create an entry point for investors interested in the company.

Apple currently sports a Zacks Rank #1 (Strong Buy).

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