This is another of my ten surprises for 2013. Apple is down 50 points today, well below its shoulder line on a topping head and shoulders pattern. The stock is breaking down. But there is a lot more pain to come. I have been increasingly negative on Apple since March of last year. While I warned you in March about margin compression, I made no mention then of stock price impact because Apple had enough momentum to ride out a miss or two. Now that Apple has begun to miss and the stock has cratered, earnings declines and larger share price declines are what we should expect in 2013.
Usually I don’t get into specific stocks, but Apple is such a bellwether and so widely owned, I have made an exception here. Let me walk you through the timetable since March because it gives you a history of how we have come here.
First, the thesis in March 2012 was margin compression generally in 2012, with Apple a prominent example:
[Content protected for Gold members only]