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Apple Can Grow to $500 in the Second Half of 2013

The stock continued to move sideways to down to a low of $385.10 into April 19, 2013.

I began to track the bottoming process for Apple and on April 22 wrote Will Apple Sour a Mixed Earnings Season? In this post I profiled Apple pre-earnings along with six other key stocks reporting that week. I followed up with Apple Ripens as Amazon, Starbucks Set to Report on April 24. Apple's first quarter results included a beat on the revenue line. The earnings reaction was quite volatile. The stock surged from $406.13 to nearly $430.00 in after-hours trading and gave up these gains by 8 p.m. The stock opened at $393.54 on April 24 and rallied to a close of $405.46, ending the day with a key reversal.

On May 6 I wrote Caterpillar, Apple Ratings Peeled To Hold. With Apple downgraded to hold from buy the stock was no longer a value play. Apple traded as high as $465.75 into May 7 and has been moving sideways since then, as the bottoming process continues.

Apple is currently rated hold according to ValuEngine with fair value at $502.00, which makes the stock 14.0% undervalued in a market where 71.3% of all stocks are overvalued.

The daily chart for Apple ($431.77) has declining momentum with the stock just below its 50-day simple moving average at $435.06. The 200-day SMA is declining at $515.32. The chart pattern is trying to form an inverse head and shoulders bottom with support around $419.00. My annual pivot is $421.05 with an annual risky level at $510.64.

My conclusion is that if the stock market continues to rally in the second half of 2013, Apple should reach $500 once again. Such would be a return to an annual level at $510.64 as a pivot and on a reversion to the mean of the 200-day simple moving average.

Chart Courtesy of Thomson/Reuters

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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