Apple Spiral Not Done Yet

The wheels continue to come off of Apple (AAPL). There are many theories surrounding the huge selloff, which has shares off more than 25% now in just eight weeks. So is it disappointing iPhone 5 sales over the first weekend? Is it a disappointing iPad Mini? Is it earnings that aren't up to snuff? Is it the potential loss of the advantageous capital gains tax rate? Or could it be that Apple had simply been over-owned, and now selling begets selling? Truth be told, it is probably a mix of all of these, with each seller having their own particular reason. But I believe weekly options and large numbers of fear are also coming into play here.

Apple trades well into the triple-digits and, for now, it is still closer to four digits than it is to a single-digit price tag -- although that could change by the day's end. As a result, even small percentage moves create big dollar changes in the stock price. Some individuals see a $10 move and freak out. Would the reaction on Twitter or in the media be the same if the stock dropped from $52.50 to $51.50, instead of the actual drop from $525 to $515? Personally, I don't think so. The big numbers have a greater psychological impact, since most people pay attention to the price rather than the market capitalization, and they look at the price over the percentage move. The smaller prices tend to attract those paying attention to the percentage move in a stock, but that isn't what's happening in Apple....429 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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