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Apple’s Violent Swings: Sign of Trouble?

Friday, 20 Apr 2012 | 4:59 PM ET

As far as the Fast pros are concerned Apple has been the stock to watch this week, seesawing between gains and losses.

Because Apple accounts for 12 percent of the Nasdaq, and 4.5 percent of the S&P 500, moves in this stock have been highly correlated to the fortunes of the market broadly.

And that begs the question - do the swings in Apple signal healthy correction or are they a sign of something more ominous?

According to Chris Verrone, head of technical analysis for Strategas Partners that depends on your time frame.

Verrone says if you’re a trader with a short time horizon, ”near term momentum has ebbed. The rate of ascent was too far too fast – it’s correcting from an unhealthy position.”

He goes on to say, “When you look at a 4-year Apple chart you see a healthy rate of ascent then in the last 3 months it went parabolic and that just can’t be sustained.”

In the near term, Verrone thinks the path of least resistance is lower.

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However, if you have a long term time horizon, Verrone adds, the weakness will ultimately be a buying opportunity – but not right away.

“I expect 2-3 months of consolidation. However, if and when Apple trades down to $525 to $550 - at those levels we think the stock bases. At those levels, the stock becomes attractive,” he adds.

And by late summer he sees the Apple resuming its march higher.

“All the moving averages in Apple are still upward sloping,” he explains. That’s a bullish sign. “I just think Apple needs to pause.”

What do you think? We want to know!

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* You can find our Apple conversation about 5 minutes into the video above.



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Trader disclosure: On Apr 20, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long MS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX CALLS; Pete Najarian is long COP; Pete Najarian is long PEP; Jon Najarian is long KOG; Jon Najarian is long DDMG; Jon Najarian is long CBOE; Jon Najarian is long CME; Jon Najarian is long CIGX; Jon Najarian is long LQMT; Jon Najarian is short UA PUTS; Josh Brown is long CRR; Josh Brown is long BRK-B; Josh Brown is long JPM; Josh Brown is long ARCO; Josh Brown is long AAPL; Josh Brown is long COP; Steven Weiss is short AAPL puts; Steven Weiss is long BAC; Steven Weiss is long JPM; Steven Weiss is long SNDK; Steven Weiss is long QCOM; Steven Weiss is long TBF; Steven Weiss is long TBT; Steven Weiss is long AIG; Steven Weiss is long HAIN; Steven Weiss is long CSC; Steven Weiss is long HGSI; Steven Weiss is long MDRX; Steven Weiss is long HK; Steven Weiss is short MT; Steven Weiss is short ERIC; Steven Weiss is short JCP; Steven Weiss is short X

For Camilla Sutton
Nothing to Disclose

For Sara Senatore
Bernstein and/or its affiliates do and seek to do business with companies covered in its research publications. As a result, investors should be aware that Bernstein and/or its affiliates may have a conflict of interest that could affect the objectivity of this publication. Investors should consider this publication as only a single factor in making their investment decisions: CMG
Bernstein and/or its affiliates do and seek to do business with companies covered in its research publications. As a result, investors should be aware that Bernstein and/or its affiliates may have a conflict of interest that could affect the objectivity of this publication. Investors should consider this publication as only a single factor in making their investment decisions: MCD

For Chris Verrone
Nothing to disclose



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