Shares of Apple (AAPL) managed to overcome the onslaught of unflattering headlines on Monday, finishing the day in the green.
The gain of 0.66% on the day, to bring shares to $169.60, marked a significant rebound from the lows seen in morning hours that left shares nearly 3% below the close on Friday.
What Caused the Apple to Fall?
Sir Isaac Newton once wondered what made an Apple fall from a tree and strike him in the head before discovering the theory of gravity, or so the story goes.
For Apple shareholders, working out what made Apple fall was far less difficult, though it likely left those impacted with the same type of headache.
Beginning early in the morning, the prospect of tightened trade tensions in the company's already slower-growing Chinese market caused concern. Of course, as its chief competitor Huawei became a symbol of China in its trade tussle with the United States after the arrest of its CFO, purchases of Apple products have become unpatriotic.
Seen a lot of these on Chinese social media this weekend. There are so many different conspiracy theories about the arrest, as if Alex Jones had started daily production of Mandarin programs.
Expect major slump in sales for AAPL, GM in China. https://t.co/HexMaG7iVk— Barton (@Barton_options) December 10, 2018
The slowdown in sales presents a problem for the company that has already been stung by Chinese consumers hanging or to old phones or simply buying second-hand.
Adding to the underlying issues was a surprise announcement of an injunction won in China by Qualcomm (QCOM) , a consistent courtroom contender with the Cupertino, California-based phone manufacturer.
"Apple continues to benefit from our intellectual property while refusing to compensate us," Don Rosenberg, Qualcomm's general counsel, said in a statement.
"Additional actions seeking similar relief for Apple's infringement of other Qualcomm patents are pending in China and other jurisdictions around the world," a release provided to Real Money adds.
The more aggressively litigious stance breaks with the more amenable stance that was expressed by the company's CEO Steve Mollenkopf in a recent interview with Action Alerts Portfolio manager Jim Cramer on CNBC's Mad Money.
What Picked Apple Up?
Another of Newton's theories declares that an object will continue to move in its state of motion unless a force acts upon it.
Markets are unfortunately not so rational, but in this case there are a few correlative forces.
One would certainly be the company's appeal of the Fuzhou court's decision that favored Qualcomm, which was broken by Cramer, who also expressed interest in the entry opportunity offered by Apple alongside his CNBC colleagues.
Beyond the appeal, as the market digested the news, many realized that the news isn't all that impactful.
"While this news certainly adds a new wrinkle to the AAPL story, it does appear contained because it should not affect sales of the company's newest products," Cramer's Action Alerts Plus team wrote. "This eventual outcome could be why we saw the stock strongly reverse midday and turn positive."
Morgan Stanley Katy Huberty explained further that the iOS11 that the injunction applies to is no longer widely used either, minimizing the impact.
"Currently, 70% of Apple's device installed base operates iOS12 (21% operates iOS11 and 9% operate an older OS) and, more importantly, all devices are currently sold with iOS12," she explained. "Therefore this injunction initially appears limited in its scope."
Huberty added that she views the dispute as more of a negotiating tactic than a suit that will produce a winner and a loser.
"As a frame of reference, during the seven years of litigation between Apple and Samsung (SSNLF) , which ended with a settlement earlier this year, Apple won an injunction against some of Samsung's smartphones models, however since it applied only to legacy models the injunction was viewed more as a negotiating tactic than anything broader," she explained.
Further, the injunction is not seen as one that can be held for a long term either, as Apple has already signaled its intention to appeal the ruling and push the decision on to a higher court that might be more amenable to their protestations.
It is worth noting that the stock touched on oversold territory just before its jump into positive territory.
Real Money's technical analyst Bruce Kamich indicated that this support could signify a rally into year end.
"The charts and indicators of AAPL are mostly bearish but prices are in an area of support and price momentum has slowed from November to December," he explained. "Is this enough to spark a bounce or rally into year-end? Maybe is my answer. Only experienced and nimble traders should play from the long side."
One such experienced trader was Stephen "Sarge" Guilfoyle.
Guilfoyle noted his bullishness on the services segment and accessories to buoy potential problems with iPhone sales even amid increased trade troubles.
If the technical support and theses like Guilfoyle's positive take on the services segment that includes ApplePay, the App Store, iCloud, and Apple Music and the burgeoning AirPod and wearable business both hold, the "jingle bulls" could indeed be laughing all the way to year end.
The key for traders will be that nimble nature that Kamich calls for. In today's market, things can change on any news at all, or sometimes a lack thereof.
Otherwise, as Cramer always says, Apple is an "own, don't trade" story.