Oct 132012

AAPL is in correction territory, down over 10% from the highs just 3 short weeks ago.  Here at AAPL Beat we evaluate AAPL valuation based on our own concept of Continuous P/E (CPE).  Please refer to the AAPL Valuation Page if you’re not familiar with CPE.  So where might we expect AAPL to bottom?  Where will value investors come in to buy?  At what price will enough buyers come in and say, “OK, this price is a deal.  I want AAPL at this price” and cause AAPL to bottom?  Well, as it turns out, recently AAPL has put in a bottom near similar CPE valuation levels.

The Jun 2011 bottom at 310.50 was at CPE 13.0.
The Oct 2011 bottom at 354.24 was at CPE 13.0.
The Nov 2011 bottom at  363.32 was at CPE 12.0.
The May 2012 bottom at 522.18 was at CPE 12.6.
The Jul 2012 bottom at 570.00 was at CPE 13.4.

Refer to the CPE Chart to see these levels visually on a two year chart.  So bottoms have been in the range of CPE 12.0 to 13.4, with the most two bottoms in 2012 at CPE 12.6 in May and CPE 13.4 in July.  If AAPL puts in a bottom near the same valuation level as one of the previous bottoms, where would that be?  Well, CPE levels change every day, ever increasing because earnings are rising every day according to our concept of continuous valuation.  So the best way to see where these levels are now and during the fall is on a price chart:

Refer to the Daily CPE Chart for a closeup view of recent months and the next couple months.  The CPE 12.6 and 13.4 levels are drawn with a light red line.  That is the general area where a low can be expected during the fall months.