Taking a bite of Apple

Apple shares has fallen from its height of 700, to a low of 400 recently. It has since recovered, trading now at 500. The case for buying Apple is tempting.

Legendary investor, Carl Icahn announced his position in Apple on Twitter two days ago: "We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come."

 

The Wall Street Journal reports that he's been building his $1.5 billion stake in Apple over the last month.  What's his outlook? Icahn says, "Even without earnings growth, we think it ought to be worth $625." (Wyatt Investment Research)

 

Looking at the charts of Apple:

 

It has broken out of a double-bottom formation, and on a new firmly established uptrend (above 200-d MA). Downside 100, Upside 200, so favourable risk-reward ratio of 1:2. It is time to take a bite at Apple. However, having missed entering it at lower prices (400s), I am a bit reluctant. The stock market is currently up. Will wait for it to slightly correct before entering.