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Apple shares dip just 1% after Nasdaq index rebalance

post #1 of 19
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After the re-weighting of Apple's portion of the Nasdaq-100 index from 20.5 percent to 12.3 percent went into effect on Monday, shares of the company's stock dropped just 1 percent.

Shares of Apple stock closed at 346.28, down 1.10 percent, on Monday. The company's stock saw a spike in volume on Monday morning, with nearly 13 million shares trading hands in just 30 minutes. As of the close of market on Monday, the company's stock is up 6.99 percent year to date.

Last Friday, the last day of trading before the rebalance, Apple's stock price ballooned up $7 at one point during the day before settling at 350.15 just before the close of market. According to one report, an investor sold off more than 6 million shares of Apple stock, worth over $2.1 billion, in after hours trading on Friday.

Nasdaq formally announced the rebalancing of the Nasdaq-100 index last month. The changes removed Apple's boosted share of the index, bringing its portion in line with a standard ratio based on the number of shares.

Though all 100 of the companies tracked by the index were affected, Apple saw the biggest change. In addition to Apple, 80 of the companies saw their weighting reduced, while Microsoft, Intel, Oracle and Google gained from the rebalancing.



Following the announcement, Apple stock declined for two weeks before recovering at the end of April. Early reports had suggested that Apple stock might drop as funds directly tracking the index sold off some of their shares, but Wall Street analysts reassured investors that any negative impact would be short-term and would represent a buying opportunity.

Brian White with Ticonderoga Securities told investors last month that the rebalancing would add "more noise" to an already loud past few months. According to White, after initial concerns regarding the Nasdaq rebalancing, possible supply issues arising from the Japan earthquake and tsunami and Apple CEO Steve Jobs' health have quieted down, Apple stock will reach new all-time highs as investors return to a focus on the company's fundamentals.

J.P. Morgan analyst Mark Moskowitz said in a note to clients that the re-weighting was unlikely to have a lasting effect. Moskowitz estimated that index funds and "passive managers" adjusting their holdings would result in sales of just 8 million shares of Apple stock, roughly half of the company's daily trading volume. The firm maintains a Dec. 2011 price target of $450 and Overweight rating of Apple.
post #2 of 19
The market reaction over the past few weeks to the rebalance looks like it will offer an excellent entry or position add opportunity to investors in AAPL. Target of 450 by Dec 2011 by analysts even seems conservative given the fundamentals behind Apple. And even that will give a cool 30% return over the next 8 months. Not too shabby!
post #3 of 19
It is ludicrous that the stock of a company that has achieved more than 50% annual compound earnings growth in each of the past five years is trading at a P/E multiple of just 16.7, placing it in the middle of the pack with every Tom, Dick, and Harry mediocre company of the S&P 500.

This is especially ludicrous when you consider that AAPL is supremely well positioned as a dominant player in two markets that are experiencing explosive growth (smart phones, tablet computers), absolutely owns the mature market for MP3 players, and is grabbing ever larger shares of the market for traditional PCs and notebooks.

Fortunately, for those of us who own AAPL stock, the price of the stock must go up at least in line with earnings because the P/E ratio can't sensibly go any lower, which means that the value of our stock is virtually assured of rising at a rate of about 50% a year for the next several years.

It's like printing money! Thank you AAPL!

PS: Point of reference: AMZN P/E Ratio 84.7???
post #4 of 19
Shocking - a change that was known weeks in advance didn't cause a large reaction the moment it occurred? That's so weird! Maybe this will be helpful for those who don't understand how the stock market works. It's not about what happens, it's about how events compare to expectations. That's why Apple's stock seems to move random directions after earnings. Some people are surprised, some are disappointed, no matter what the "expectations" quoted on wall street are.
post #5 of 19
I agree ... todays low is a drive to have others sell their shares due to this downward momentum only to buy in again. Well, the recent events and news are also major factors in the price of the stock. Notice that the movement is similar to the DOW, except on earnings and new product openings.

But in reality, this is just a temporary dip for the big merchants to buy back in and get them to drive the price up again and then when it peaks they make $3-$7 a share out of their millions of shares traded. Its an unethical but rather a very good strategy/technique (if you may call it) the big boys from big institutions plays. Sadly, that's just a way to drive profits. And then when it peaks up they'll short it. I really hope the market realizes that tomorrows open is a big opportunity to get in the action as quick as they can before they get left behind when the stock price heads in the upward continuous direction.

Apple is just a valued company that doesn't drive their earnings from fees (unlike RIMM) as Cramer puts it. The gross of their profit comes from actual sales of a real product unlike other tech companies out there. Not advertising. A genuine piece of technology that changes the world everyday. The price target of Wall Street analysts is $450, however, they too estimated recent fiscal Q2 2011 earnings which Apple obviously continued its trend of positively crushing Wall Street expectations year after year when last week they released a $24.67 billion. in sales - a smashing 83% jump in revenue from $13.5 billion of sales from Q2 of last year. This is a great company to invest in right now when most, if not all, analysts are very positive with this company.

Apple is cheap right now and undervalued ... but not for long. Tomorrow will be an upward drive. I'm Long in Apple
post #6 of 19
New posters touting Apple. What can that mean?
A.k.a. AppleHead on other forums.
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post #7 of 19
I wouldn't call it touting ... none of the recent posts (one by me) asks any posters/users that they should buy. It's simply a response to the article.

FYI - I don't own any Apple shares nor am I promoting the Company. I do own many Apple products though
post #8 of 19
I wish Apple did something with its cash. Just buy Microsoft and stop them from making crappy products. The world would see a new paradigm shift in innovations and science. Steve would get the Nobel peace price and the we would all live in peace and harmony.
post #9 of 19
Quote:
Originally Posted by shompa View Post

I wish Apple did something with its cash. Just buy Microsoft and stop them from making crappy products. The world would see a new paradigm shift in innovations and science. Steve would get the Nobel peace price and the we would all live in peace and harmony.

Nah, Balmer and Gates should buy the stock back, close the company and return the money to the share holders ...
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Been using Apples since 1978 and Macs since 1984
Long on AAPL so biased. Strong advocate for separation of technology and politics on AI.
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Use duckduckgo.com with Safari, not Google Search
Been using Apples since 1978 and Macs since 1984
Long on AAPL so biased. Strong advocate for separation of technology and politics on AI.
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post #10 of 19
A good chart on how come you shouldn't buy based upon the NASDAQ 100.
post #11 of 19
Quote:
Originally Posted by mdriftmeyer View Post

A good chart on how come you shouldn't buy based upon the NASDAQ 100.

What chart?
post #12 of 19
I saw one estimate of over $75 B in Apple owned by ETFs and various NASDAQ indexed funds. Of course the latter do not need to rebalance immediately. So the selloff may still take a little time to work through.
post #13 of 19
Quote:
Originally Posted by Robin Huber View Post

New posters touting Apple. What can that mean?

It means the board is fortunate to gain some fresh perspectives.
post #14 of 19
Quote:
Originally Posted by apple408 View Post

I really hope the market realizes that tomorrows open is a big opportunity to get in the action as quick as they can before they get left behind when the stock price heads in the upward continuous direction.

This is a great company to invest in right now when most, if not all, analysts are very positive with this company.

Apple is cheap right now and undervalued ... but not for long. Tomorrow will be an upward drive. I'm Long in Apple

Quote:
Originally Posted by apple408 View Post

I wouldn't call it touting ... none of the recent posts (one by me) asks any posters/users that they should buy. It's simply a response to the article.

FYI - I don't own any Apple shares nor am I promoting the Company. I do own many Apple products though

You say you're "Long in Apple" after a post that reads like an analyst's report, then claim you are not touting it? Saying you never asked anyone to buy seems specious after you and the other newbie both made unrelenting upside cases for purchase.

I'm not calling you a liar. But I am saying that posters who are new to the site must understand that credibility here is based on your record. When you haven't got one, your motivations are subject to question. And bald denials are likely to fall on deaf ears. I welcome you to the site and look forward to seeing you amass a record that gives us all confidence in your sincerity.

For the record, I agree with you. I am actually long on APPL, having hung on to my last block of stock for over ten years.
A.k.a. AppleHead on other forums.
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post #15 of 19
Quote:
Originally Posted by Robin Huber
New posters touting Apple. What can that mean?

Quote:
Originally Posted by iccguy View Post

It means the board is fortunate to gain some fresh perspectives.

I was suggesting that two successive posts by newcomers strongly suggesting that people buy APPL now leaves one to ponder whether or not some investors may be involved in a campaign to drive up the price of their stock.

I'm not sure whether you didn't get my inference, or whether you just disagree.

In either case, the part of the post above regarding newbies applies to you as well. I welcome fresh perspectives, but sensible people weigh the reliability of sources. Old friends have earned our respect, new ones have to earn it.
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #16 of 19
Quote:
Originally Posted by Robin Huber View Post

Quote:
Originally Posted by Robin Huber
New posters touting Apple. What can that mean?



I was suggesting that two successive posts by newcomers strongly suggesting that people buy APPL now leaves one to ponder whether or not some investors may be involved in a campaign to drive up the price of their stock.

I'm not sure whether you didn't get my inference, or whether you just disagree.

In either case, the part of the post above regarding newbies applies to you as well. I welcome fresh perspectives, but sensible people weigh the reliability of sources. Old friends have earned our respect, new ones have to earn it.

I get the inference. I was merely responding that my intent was only to share my perspective and opinion on Apple's valuation and current investment opportunity due to the situation described in the article being responded to. Perhaps as a newbie here I was being a bit defensive to the inference which could easily be construed as condescending.
post #17 of 19
Quote:
Originally Posted by iccguy View Post

I get the inference. I was merely responding that my intent was only to share my perspective and opinion on Apple's valuation and current investment opportunity due to the situation described in the article being responded to. Perhaps as a newbie here I was being a bit defensive to the inference which could easily be construed as condescending.

Thanks for your thoughtful response. Perhaps as an oldie here I was being a bit paranoid.

Looking forward to your future contributions.
A.k.a. AppleHead on other forums.
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post #18 of 19
You need to relax ... just cause you have 1000+ posts doesn't mean we the newbie cannot have any opinion. Seriously, you sounded very controlling as if we the "newbie" as you repeatedly mentioned, have to bow down to you. C'mon man why dont you stick with the topic instead of attacking. These are relatively posts based on opinions. If you think that it sounded like touting ... then that's your interpretation. You should've bought in with the run this morning lol.

I do want to thank you for the complement of my posts sounding like an analyst. I guess I just read a lot about the company.

Now let's end this bickering here and go back to the topic ... well the topic has died. Apple stock went up this morning which is good having said that they are a well sound company.

Dont buy Apple ... is this better???
post #19 of 19
Quote:
Originally Posted by apple408 View Post

You need to relax ... just cause you have 1000+ posts doesn't mean we the newbie cannot have any opinion. Seriously, you sounded very controlling as if we the "newbie" as you repeatedly mentioned, have to bow down to you. C'mon man why dont you stick with the topic instead of attacking. These are relatively posts based on opinions. If you think that it sounded like touting ... then that's your interpretation. You should've bought in with the run this morning lol.

I do want to thank you for the complement of my posts sounding like an analyst. I guess I just read a lot about the company.

Now let's end this bickering here and go back to the topic ... well the topic has died. Apple stock went up this morning which is good having said that they are a well sound company.

Dont buy Apple ... is this better???

Read my exchange with iccguy for a good example of how a newbie and a grandpa can resolve their differences without escalating to sarcasm and name-calling.
A.k.a. AppleHead on other forums.
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