Apple (NASDAQ:AAPL) Buyers be Patient

January 28, 2014, 09:33 am ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Today there will be frenzy in shares of Apple (NASDAQ:AAPL) as investors large and small digest the decline in the stock price.  Carl Icahn may actually wonder why he didn't just stay in Netflix (NASDAQ:NFLX), but I personally believe that was a responsible decision to sell NFLX so I won't harp on it.  Still, he like other investors in Apple can be some of the most diehard in the world, but when everything comes down to it all of them care about price.  Not unlike everyone else with a Financial Investment, those people invested in Apple do not like to see their assets decline, and as of the pre-market session, Icahn had lost $252 Million from his AAPL investment.

Of course, some people will continue to support a stock at its peaks, as well as through the tough times, and those people will tell you to buy the stock no matter what, at all times, because they are so impassioned about the company, the management, the products, or some derivative of the same.

However, as impassioned as those people maybe, there is no place for emotion in this business.  Investors who are responsible and not emotional react to price and in doing so they buy when everyone else is selling, and sell when everyone else is buying.  Late last year, when Apple tested $572, our analysis suggested that investors sell Apple because the stock was poised to decline. 

As you might believe, the repercussions were severe from Apple diehards, but not nearly as severe as they were when we were telling investors to sell Apple near $650 a year or so before.

There is a time and a place to buy the stock as well, and our analysis helps investors pinpoint that time just like we pinpoint sell signals in the stock, and that those buy signals are not based on an emotional reaction either.  The buy signals are conditional, and a few factors must come into play.

Almost always, in order for Apple to become attractive as a buy it must pull back aggressively.  In order for that to happen, either the market itself must pull back aggressively or an added influence of negative news specific to the company might also occur.  Then, finally, the stock must also hold the trading channels that define the range.

Since we recommended a sell in Apple from $572 the stock has fallen by more than 10%, the market itself has recently experienced a pullback, and negative news specific to Apple has come.  Thus far many of the catalysts we look for have been satisfied, but Apple is not quite yet an outright buy.  This stock may be a good buy soon, but according to our immediate analysis (trading report for AAPL) investors are better off waiting just a little while.  Don't act with emotion, but instead approach the stock with a discipline not unlike what I have described above; it is a much better approach over time.

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