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Apple Shares to Correct Further, Likely to Fall to $362: Strategist

The drop in Apple's share price below its 50-day moving average on Thursday has some market watchers asking whether the blue-chip stock is beginning to lose its shine. One trader told CNBC on Friday that he just went short on the stock based on a technical change in the stock’s movement.

Apple
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Apple

Scott Redler, Chief Strategic Officer, of online trading firm T3live.com, said during the latest earnings season, Apple had for the first time registered a technical pattern called an "island top" which technical analysts view as a short-term bearish signal.

“I'm short right now. I do think there's going to be some corrective type action, and we'll see it probably hitting the 200-day moving average....that's the line in the sand that institutions are going to come in and stand behind it, and that's around $362-$364," Redler said.

Apple closed at $385.22 on Thursday in New York.

The stock was trading well above $415 before it came up with below-forecast earnings on October 18 for the first time, said Redler, adding that there are a number of nervous investors in the market who are concerned about competition to Apple's iPad from the Kindle Fire and whether the company can continue to keep coming up with blockbuster products.

Apple's stock hit a record high of $422 on October 14, and has a market cap of $358 billion, second only to Exxon Mobil , which has led many strategists to believe Apple's shares are overvalued.

"It is the most over-owned stock out there right now. And psychologically at this level, you are not getting many more people involved." Redler said.

Redler's advice to Apple CEO Tim Cook: create more shareholder value by conducting a stock split that would allow more people access to the stock at a cheaper price.