Apple Inc. (AAPL) Falls For Week Because Of Monday Morning Drop

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December 3, 2014 2:32pm NASDAQ:QQQ NYSE:IVV

apple inc.Apple Inc. (NASDAQ:AAPL) fell 3.37 percent for the five trading days ending Tuesday, Dec. 2, primarily because of a large drop within a half hour after the opening of the trading day on Monday, Dec. 1, when AAPL fell as much as 6.4 percent on high volume

before partially recovering by the end of the day. The Dow was up 0.11 percent for the five days, and NASDAQ was up 0.02 percent, so this was not a good week for AAPL.

Analysts Raise Price Target

JMP Securities raised its price target on AAPL from $135 to $150 while maintaining its “market outperform” rating, citing demand for the iPhone and iPad, and noting that Apple could gain market share because of a lack of “competitive momentum” from Android (NASDAQ:GOOG).

Barclay’s raised its target from $120 to $140 based on demand for the iPhone 6, the trend towards bigger screens, and the upcoming launch of the Apple Watch. Barclay’s said that the gross margin estimates appeared too conservative.

Why Did AAPL Drop on Monday Morning?

There is no single obvious reason for Apple’s sudden drop on Monday, which included a sharp dip of more than 3 percent within a single minute. Plausible explanations include profit taking, reactions to Morgan Stanley trimming 1 percent from its position in AAPL, and algorithmic high-frequency trading.

Why Did Morgan Stanley Trim Back Its AAPL Holdings?

Morgan Stanley said that its financial models recommended a modest trimming of its holdings in AAPL, nothing that the stock had almost doubled in the last three years. Also, in a report issued on Monday, Morgan Stanley downgraded its rating on the technology sector as a whole from “overweight” to “market weight.”

High Stakes iPod Antitrust Lawsuit Gets Underway

On Tuesday, opening arguments were presented in an Oakland, Calif., court in a class action antitrust lawsuit. If Apple loses, damages could potentially be over a billion dollars. At issue is whether Apple used software updates to prevent other companies from selling music that would be compatible with the iPod.

The lawsuit, which is expected to last about two weeks, was initially filed almost 10 years ago. Lawyers are expected to show a videotaped deposition of Steve Jobs.

New Technology Could Protect iPhone Screen

Apple has been granted a patent for technology that would protect iPhones when people drop them. The patent includes five different methods for preventing damage to a dropped phone. The coolest is a mechanism that would change the device’s center of mass while it is falling, so that it could land safely on the floor like a cat.

iShares Core S&P 500 ETF — IVV

Many analysts and investors believe that AAPL is still a great investment. If you would like to invest in AAPL’s future, while diversifying your holdings to help avoid sudden drops like the one AAPL had this week, consider an ETF, such as IVV, which gives you access to 507 large, established U.S. companies. AAPL is its largest holding, comprising 3.76 percent of the fund.

By Diana Primavera, ETF Daily News

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