Apple Inc. (AAPL) Will Hit $390: Analyst

Apple Inc. (NASDAQ:AAPL) shares have fallen 8.9% over the past week. You’re probably well-versed in the speculation behind the decline, as everything from a mixed tablet market share forecast (see Why Are Apple Shares Sinking?) to a bevy of bearish technical indicators have been blamed.

On Bloomberg TV on Friday, William Baruch of Iitrader.com was discussing his sentiment on the tech giant, and in his opinion, things don’t look too good for Apple Inc. (NASDAQ:AAPL) right now. Baruch had this to say:

“When the “death cross” happened this week – the 50 day moving average moving to the 200 – I see a lot of potential to the downside; my downside target is $390, with an extreme downside of $325 [..] there’s a lot of liquidation on a technical basis […] people can’t hold a market that is swinging this big. If margin rates continue to hold higher than they have been – this stock went from $75 to $700 in a matter of three years – if 50% retracement comes in at $400, I think technically, it has a good chance of getting down there. It’s a high probability trade. And if you’re long Apple, why not protect it with some put spreads […] it’s a great risk-reward investment.”

Essentially, Baruch’s opinion of Apple Inc. (NASDAQ:AAPL) is similar to most other technical analysts we’ve covered, who cite that high volume during bearish days and a downward sloping 50-day MA are reasons to consider selling this stock. While traditional value investing theory holds that Apple is cheap, trading below 10 times forward earnings, investors must realize that there may be irrational psychological factors at play here (see Apple Investors’ ‘Psychology Has to Change’). For the time being, we’d wait for a positive growth driver, such as a Q1 earnings blowout or a deal with China Mobile, to boost shares to the fairer valuation they deserve.

What are your thoughts on Apple Inc. (NASDAQ:AAPL) at the moment? Are you buying in now, or do you see more downside in the near term?