Is Apple Inc. (AAPL) Going to $400 or $500 First?

The other, more systematic risk facing Apple shares is the overall strength in the stock market. The major indexes have not seen these levels since 2007. This opens the door for a healthy correction before the market tries to push higher, and it feels like that is on the horizon. A general sell-off by the broader market will almost certainly take shares of Apple down as well.

Regardless of the overall view you may take of the market, it has rallied significantly and is due for a breather. Fools are not market timers, but this does not preclude being vigilant about the current state of stocks relative to where they have been. Taking a long-term view does not require being blind to the immediate position of things.

Which handle wins the tug-o-war? 4 or 5?
I continue to believe that with a P/E ratio of 10.4 and a dividend yield of 2.4%, Apple remains one of the most attractive core holdings on the market. With that said, I am looking for the stock to stumble once or twice more before heading higher. Apple needs to shake loose the remaining bulls before bear-hunting season opens for business.

The Surface Pro release may shake things up on Feb. 9, and any market weakness will take shares lower as well. The company maintains its longer-term leading role, but caution is prudent over the coming days and weeks. Ultimately, if you can buy shares before $425, they are a bargain, but I still think we touch $400.

The article Is Apple Going to $400 or $500 First? originally appeared on Fool.com and is written by Doug Ehrman.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.