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When Should Investors Buy Apple? (Update 2)

Updated from 11:56 a.m. EST to provide comments from J.P. Morgan in the fifth paragraph and updated shares price.

NEW YORK ( TheStreet) - Apple (AAPL - Get Report) shares hit $500 for the first time on Monday, as the iPhone maker pushes towards a $500 billion market cap, but should traders and investors take pause after Apple's recent run-up?

It depends on your time-frame, according to a variety of traders and analysts.

Every stock has ebbs and flows, and Apple is no different, having soared 23.4% year-to-date. This far outpaces the broader NASDAQ, which has returned 12%. Competitors such as Research In Motion (RIMM) and Google (GOOG - Get Report) have returned 4.9%, and -5.4%, respectively.

With rumors of a March iPad 3 launch swirling, and Apple expected to launch its new iPhone, and potentially, its TV offering later this year, investors are wondering how best to ride the Apple wave.

J.P. Morgan analyst Mark Moskowitz described Apple as being in "a league of its own" following the company's latest earnings report, back in January. He described Apple as being a "primal force behind the mobility mega-trend" and raised his price target to $625 from $550 following the earnings release.

Apple's stock has historically run up into major product launches, then sold off afterwards. In the two weeks after the launch of the iPhone 3G, iPhone 3GS, iPhone 4, and iPad 2, shares fell, 4.7%, 3.6%, 9.9%, and 0.4%, respectively.

Analysts, however, have faith in that Apple will continue its upward trajectory longer term. Noted Apple bulls such as Piper Jaffray's Gene Munster, and Barclays Capital's Ben Reitzes, for example, both have price targets meaningfully above where shares are currently trading.

Following Apple's latest quarter, where it had over $46 billion in revenue, Munster raised his price target to $670, as he believes "the true force of the Dec. quarter will be felt throughout CY12." Munster went on to say, "We believe investors are missing the potential long term upside of Apple's current market expansion and future upgrade cycles." He rates shares overweight.

Reitzes raised his price target to $630 and overweight, as he believes "Apple's valuation is attractive & that shares can continue to benefit from strong iPad & iPhone demand, Mac share gains, international expansion & new innovations. We believe Apple deserves a higher multiple versus the group given our view that it is the best growth story in IT hardware over the long term."

On a shorter-time frame, however, Apple's stock appears overbought, according to technical analysis used by traders. The Relative Strength Index, or RSI, a key short term indicator, notes that Apple is running into technical resistance. The tech giant's stock is rated around 85 on the RSI, which defines anything over 70 as overbought.

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