Apple, Inc. (AAPL)

There is an overwhelming amount of positive sentiment in APPL stock. So much that even many of the negative comments on this site are “positive long term.”

Many people bought at 200 and many more bought it lower and rode it all the way down to the 80s, as evidenced by the overwhelming positive sentiment in the stock. AAPL is the #1 of the top ten stocks searched on the street.com week after week, it has been touted on FastMoney and Mad Money and it is one that David and Tom Gardner have chosen as one of their “No Bailout All-Stars.” Yet, I don’t understand what catalyst exists to move this stock higher. There is no chance for a short covering rally as the short ratio is only .6 as of Dec 10th. They have $27.55 per share in cash and they don’t even pay a dividend. Perhaps they are planning to buy out a formidable compeitior like RIMM– that is their only chance to succeed and they have enough cash to it.

Apple is facing cutthroat competition with RIMM and others. There are high quality substitutes that are readily available at a lower price for most of their products. The high overhead at their retail outlets has prompted them to offer their products for sale at Walmart – the investment community actually put a positive spin on this – incredulous!

I see a dog stock that has gone from $200.76 to just over $90 in a year, and is more likely to get cut in half again by the end of 2009. The chart is broken. Note the series of lower highs as the stock rallies and lower lows as it retreats; with each upturn, it increases less each time and on lower volume. This pattern will likely break to the downside; the stock faces way too much overhead resistance to move higher. Get out before the Obama inauguration.