What is Apple’s Uneven Bounce About?

Apple (NASDAQ:AAPL) was able to breathe again on Thursday, a day after the stock’s worst performance in four years and following a brief period when the company’s market capitalization slipped below the $500 billion mark before recovering. It closed the day 1.57 percent up at $547.24.

What is the State of Apple’s Stock?

Shares are down 6.5 percent for the week as of the close on Thursday, but the worst day came on Wednesday, when they fell more than 6 percent on for their biggest single-day loss in four years and leading to the company losing $35 billion of its market value. Concerns about the growing clout of its rivals, which have sparked most of the pessimism, received another boost on Thursday after the IDC released a report saying Apple’s rank in China’s smartphone market was down to No.6.

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The stock reached its peak in September on the buzz surrounding the launch of the iPhone 5, when it ended the day at $702.10, and is still up more than 35 percent year-to-date, but there are undeniable concerns plaguing it even if the exact cause has puzzled analysts.

CHEAT SHEET Analysis: What are the Negative and Positive Forces Pulling at the Stock?

One of the core components of our CHEAT SHEET investing framework focuses on the possible forces affecting the stock’s movement. According to some, the negative catalysts this week have included a DigiTimes report that said there may be a 20 percent quarter-over-quarter decline in Apple’s demand for parts for the iPhone 5. Some bullish analysts countered that even if the report were true, the conclusion that there was, in turn, slowed demand for the phone itself may be a case of simplistic misreading.

Another report, from IDC and regarding tablets, predicted that Apple would lose some of its share of the market it has hitherto dominated to Google’s (NASDAQ:GOOG) Android and Microsoft’s (NASDAQ:MSFT) Windows. Then, Nokia (NYSE:NOK) and China Mobile (NYSE:CHL) announced a new partnership, leading to speculation that the Finnish company’s growth in China may automatically imply Apple’s fall. Some worried if the deal may be mutually exclusive, leaving Apple in the cold when it came to sharing the profits of the world’s largest carrier.

Other general concerns include Apple’s product lineup for the coming year and the debate regarding the fiscal cliff.

“The wind blows slightly from the south instead of the east one particular morning and the stock is down 6 percent,” Hudson Square Research’s Daniel Ernst, one of the analysts puzzled by the negative mood, told Reuters. “It makes no sense. There are lines around the block for their products all around the world. No other company has that.”

The bulls continue to insist that there are no obvious reasons for worry, as the scope for growth in the smartphone and tablet market was still strong, there were real murmurs of an Apple TV next year, and margins were as high as ever. The buy recommendations have not stopped raining down.

Topeka Capital’s Brian White, arguably the biggest Apple bull, said he was ever confident in the company. “Given our view that the fundamental story around Apple remains strongly intact, we believe this latest decline is setting up another attractive buying opportunity,” White said, according to The Wall Street Journal. “Once the tax-related selling abates, the stock will move sharply higher.”

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