Apple Bearishness About to Turn

 | Nov 09, 2012 | 12:30 PM EST
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From Apple's (AAPL) all-time high of $705 in September, it got down to $533 this morning in the premarket.

That's almost a 25% decline from the highs.

That's actually not that unusual for Apple. In each of the last eight years since 2004, Apple's had at least one big retracement each year. The pullback varied from between 11% and 52% in the aftermath of the Lehman failure.

So, this current pullback is right in the middle of that range. It's not the biggest pullback, but it is certainly decent.

None of us can predict the future. Jim Cramer has said it's wise to get out of Apple ahead of the looming fiscal cliff discussions. That's certainly a threat to the stock, which is a big liquid ATM for a lot of institutional investors.

But I am in the same camp as Doug Kass, who has now gone long Apple after saying to short it around $660. I think it's time to put money to work in Apple again.

We had worries last year about end of year threats to Apple and the risk of politicians getting in the way. But last year, Apple's stock bottomed around $360 – after dropping 15% from a $425 high earlier in the year.  It then went on a huge tear through early April blowing past $600 and later touched $700.

Recall that last year around this time 4S had just launched.  I remember Erin Burnett sending a CNN camera crew into an Apple store near Columbus Circle and declaring that this new phone was going to bomb because there were more Apple employees in the store than customers (at 10am on a weekday).  We all know that, as the holiday quarter rolled on, the 4S was an unstoppable hit.

This year, we have the same negative concerns by some about the iPad Mini.  I suspect as the quarter continues, we'll see increasing evidence that it too is actually a hit when the sales numbers are tallied.

And even though many investors could want to stampede out of the stock quickly to raise cash and Apple is liquid enough to oblige them, this threat has to be balanced with the number of people who would also want to take the opportunity to pile into the stock –especially at lower levels.

This fiscal cliff issue is serious but it's not 2008.

I think $533 could end up being like last year's $360 bottom when we look back at Apple's charts in a few months from now.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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