How Low will Apple Go?

How far do you have to go back to see shares of Apple Inc. (NASDAQ: AAPL) as severely oversold as they are right now?

The last time AAPL experienced a multi-day sell-off lasting five or more days – and taking the stock to oversold levels – was back in late September, as the stock was heading toward what turned out to be a major turning point in the stock market in the form of the fall 2011 lows.

From that sell-off last autumn, a sell-off during which Apple shares fell for seven consecutive sessions (and nine out of ten), AAPL reversed sharply, gaining over the next five days and climbing by more than 14%. To date, AAPL is up more than 57% from that massive correction.

Are there any lessons from that pullback for this one? While it is true that Apple’s strong snapback rally was testament to the ability of stocks to bounce, and bounce hard, after being driven into oversold extreme territory, potential investors and traders in AAPL may be even better served by keeping in mind that the selling that took Apple lower last fall could certainly happen again, potentially making the stock’s current oversold levels look more moderate, if not outright mild, by comparison.

For all the Apple critics, detractors and outright haters, there remains a bid beneath the company that has, for all intents and purposes, kept the S&P 500 high and climbing for months. Apple, historically speaking, has not been allowed to fall very far, very long before traders have tended to sense value and come off the sidelines to buy. Currently, AAPL has “consider buying” ratings of 8 out of 10, the highest rating in the stock since a previous, single-day, “consider buying” rating of 8 out of 10 earned in the first half of March. That 8 rating anticipated a five-day winning streak for AAPL, and a gain of 11%.

Heading into trading on Tuesday, Apple also has a sizable, short-term positive edge of nearly 3%.

Note that while sellers are taking Apple shares lower again on Monday – and Google (NASDAQ: GOOG) shares as well, which are off almost 3% – other major technology stocks, such as Intel Corporation (NASDAQ: INTC) were moving higher on the first trading day of the week, up 1% midway through the session. The primary technology exchange-traded fund, the Technology Select Sector SPDRS ETF (NYSE: XLK) remains oversold, however, trading lower by more than half a percent and closing in the red for a second day in a row.

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David Penn is Editor in Chief of