With shares nearly 20% lower over the past 3 months, you may be tempted to sell out of Apple before the carnage gets any worse.
Negative sentiment surrounding this stock seems to be growing every day.
For example, John Mendelson, a top ranked technical analyst for ISI told CNBC that Apple likely has more downside – a lot more.
Not only has the stock flirted with its death cross – where the 50-day moving average falls below the 200-day – volume has increased as the stock accelerated lower.
Technically speaking, those are very bearish developments.
"My view continues to be that because the stock ran up so fast last spring, the next significant support area is $420," he said.
$420 – the next stop for Apple?
According to Mendelson's technical analysis – yes. But according to Mad Money's Jim Cramer – no. Absolutely not.
"Let me just say, for the record, this is all nuts," said Cramer. Apple has become a story of the holders, not the products. It is a story of the chart not the fundamentals. It is a story of fear not of opportunity."
In other words, when it was going up, it was the stock to buy. Now that it is going down, it's the stock to sell.
But if you're short Apple, Cramer thinks you'd better make your move quickly – that is, he doesn't see a lot more downside.
He thinks downside momentum will be eclipsed by something far more important – fundamentals that are optimistic.
And Cramer sees plenty of reason for optimism.
"We could find out that Apple's going to be able to put out ten times more iPads because the device is supplanting the PC market. We could find out the iPhone will have had bigger sales than we thought. We may even hear an OMG product might be on the way," said Cramer.
The current price action isn't factoring in much if any of that.
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In addition, "as the stock goes down, the amount of cash on the books makes the stock that much more attractive," Cramer added. "We're talking $100 billion in cash-and growing—as shares decline that becomes an increasing percentage of the company."
All told, Cramer said the most likely outcome is that "The valuation will become so cheap that it would be too compelling for informed investors not to own."
But what about the negative technicals and the death cross we mentioned above – technicals that are getting a lot of attention.
"Meaningless at this point," said Cramer.
Cramer may be onto something. Research from CNBC's Fast Money shows analysts who study charts seem to be a lot more bearish on the stock than analysts and investors who concentrate on fundamentals.
Cramer believes it's only a matter of time before sentiment changes and Apple bulls step in. "If it visits the low 500s again, it's time to buy," he said.
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