Wrong Calls: Intel, America Online and Apple

NEW YORK (TheStreet) -- There have been many wrong calls made by CEOs, analysts and investors over the past 20 years. But the three I remember as the absolute worst calls were the boom in Intel (INTC) in the mid-1990s, the America Online (AOL) purchase of Time Warner (TWX) in January 2000, and, most recently, the $1,000 price target for Apple (AAPL) in 2012 as the stock approached $700 a share.

As the new millennium began and the tech bubble was inflating, both Intel and AOL were considered by many to be "key to the market" stocks.

Intel Kicked Outside

Intel really took off beginning in 1991, with the "Intel inside" campaign. Nearly 200 other equipment manufacturers engraved or stamped that emblem on the devices they made with Intel microprocessors inside.

As the Intel hype evolved and the stock traded higher, this advertising campaign implied that consumers should only buy devices with "Intel inside" logo as a seal of approval. As Intel became a household name, the stock was selected to be a member of the Dow Jones Industrial Average on Nov. 1, 1999. I remember how I concluded that Intel was the key to the market, with the stock already in the S&P 500 and the Nasdaq.

The Intel bubble popped from above $75 a share in the second half of 2000. Since then it has been trading back and forth around its 200-week simple moving average, now at $22.83.

AOL Crash

I had been a subscriber to America Online way before the company's stunning announcement that it would buy Time Warner back on Jan. 10, 2000. Analysts called this merger the most significant development in the emerging world of the Internet. Wrong call!

During the 12 months before this deal, AOL stock traded as high as $95.81. But that isn't the same AOL stock of today. The merger was such a bad call that the AOL Time Warner board of directors removed AOL from the company name in September 2003, and also changed its symbol back to the old Time Warner symbol, TWX.

Although it was so popular before the merger, AOL became the unwanted brand. The two companies split again in the fourth quarter of 2009. Eventually AOL began a turnaround in the third quarter of 2011. I still use AOL today and believe that their products, services and content are superb.

Rotten Apple

Apple became a stock market icon in April 2009, when the stock traded at $104.25 and broke out above its 200-week simple moving average. Apple was the key to the market until it reached $700 a share in September 2012. All of that was great.  But analysts made the wrong call when they upwardly revised Apple's price target to $1,000 a share. Instead, Apple fell from the tree and landed behind the woodshed, trading as low as $385.10 in April 2012.

The stock had been the leading momentum stock and, by March 2013, it became the cheapest value stock. Since then it has been attempting to return to its momentum status.

Intel, AOL, Time Warner and Apple Today

Here are my current buy-and-trade profiles for these stocks.

Intel ($25.53) has been upgraded to buy from hold according to ValuEngine, with the stock 21.9% overvalued. The weekly chart profile is positive but overbought, with the five-week modified moving average at $24.94 and the 200-week SMA at $22.83. My annual value levels are $20.78 and $19.44 with monthly and quarterly pivots at $24.26 and $24.40, with semiannual risky levels at $26.33 and $28.95.

America Online ($45.24) has recently been upgraded to buy from hold, with the stock 46.3% overvalued. The weekly chart is positive but overbought, with the five-week MMA at $43.79 and the 200-week SMA at $26.85. My monthly value level is $39.04, with a weekly pivot at $43.61 and quarterly risky level at $54.83.

Time Warner ($66.19) has a hold rating with the stock 20.8% overvalued. The weekly chart is neutral, with the stock below its five-week MMA at $67.39, and with the 200-week SMA at $42.40. My semiannual value level is $63.57, with a weekly pivot at $66.55 and quarterly risky level at $72.77.

Apple ($532.94) has been upgraded to buy from hold, with the stock 8% overvalued. The weekly chart is negative with the stock below its five-week MMA at $539.23 and its 200-week SMA at $428.79. My annual value level is $517.05, with a monthly pivot at $549.12 and weekly and annual risky levels at $549.12 and $586.06. Semiannual risky levels are $657.40 and $666.93.

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

Follow @Suttmeier

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

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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