Apple in rare territory. Time for a bounce?

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Apple is in rare territory, now almost 10 percent below its 50-day moving average, a 3.5 standard deviation (SD) move.

That is very rare territory. It has only been in this range seven times, or 0.1 percent of all trading days since 1990, according to our partners at Kensho.

In each of the seven times the next move has been higher, reverting to its mean. The average time before moving higher over those seven times was 1.9 days.

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Here are the times it was trading in a range of 3.25 to 3.50 SD's below the 50-day moving average:

  • 09/17/2008 - 09/18/2008
  • 06/19/2002 - 06/20/2002
  • 10/03/2000 - 10/04/2000
  • 10/24/1997 - 10/27/1997
  • 10/20/1997 - 10/21/1997
  • 07/01/1997 - 07/02/1997
  • 06/18/1992 - 06/19/1992

Bank of America's downgrade of Apple today (on deceleration of iPhone) may put even more pressure on the stock, but the point is, it is due for a bounce.

For those looking for a statistics primer: One standard deviation means there is a 68.2 percent chance it will stay within a given range from the mean, in this case the 50-day moving average.

Two standard deviations means there is a 95 percent chance it will be within a given range; three standard deviations means it is 99.7 percent within a given range, and when you get toward four standard deviations...well, it doesn't happen very often, and that's what gets quants and other statistical types to sit up and take notice.