Drop in Apple Stock Is a Crime

NEW YORK ( TheStreet) -- Apple ( AAPL) was humming along. In fact, as it notched an all-time high just above $705 on Friday, Sept. 21, it looked as if it might spend this past week consolidating in the $695 to $705 area.

Instead, the relative bottom fell out.

>> Also see: Apple Bull Case Laced With Sloppy, Bearish Holes

Granted, from a percentage standpoint, the drop was not all that dramatic. However, I would have expected Apple to follow in Google's ( GOOG) footsteps and break out.

In one respect, this should not come as a surprise. When a stock runs like AAPL has -- up nearly 20% over the past three months and over 60% year-to-date -- you expect profit-taking.

Plus, this is not uncommon behavior for AAPL when it hits key psychological levels. It reacted similarly at $400 and $600, only busting through with authority at $500.

AAPL Chart AAPL data by YCharts

But then, there's another side. One that suggests drops in AAPL are not natural and hardly logical.

On Tuesday, I targeted Wall Street analysts such as Gene Munster for using unscientific methods to derive irresponsible estimates. On Wednesday, I discussed the media's role, particularly smash-and-grab artists such as Henry Blodget, in market-related AAPL hysteria: Cheerleader Analysts Shaft Apple, Investors; and Were Apple's iPhone Sales 'Crappy'? Henry Blodget Thinks So.

While I do not believe in some concerted effort to ding AAPL, analysts and the media deserve scrutiny for the stock's volatility.

To be clear, I don't think there's an analyst or media member out there who consciously attempts to make AAPL move -- at least not down. In fact, analysts such as Munster have become unabashed cheerleaders.

As analysts morph into caricatures of themselves, however, their bullishness can have a counterproductive impact on the stock.

Consider Munster. His absurdly high estimates for the stock and iPhone sales alongside his seemingly constant -- and incorrect -- predictions for iTV contribute to the noise investors can't ignore. Thus, AAPL, often for no good reason, drops.

Dan Rayburn wrote an excellent article about Munster's record on iTV for Seeking Alpha in August: "While I don't know Gene personally, and for all I know he's one of the nicest guys in the world, I don't understand why anyone listens to him when he's been predicting the same thing, year after year, with no results to show for it."

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