Are Apple Inc. (AAPL) Shares Rotten?

After spending most of the day in negative territory, stocks pulled out a win in the last part of the session,  with the
S&P 500 (S&P Indices: .INX) and the narrower, price-weighted Dow Jones Industrial Average (Dow Jones Indices: .DJI) ultimately gaining 0.5% and 0.3%, respectively.

The VIX Index , Wall Street’s fear gauge, responded well,  falling 9% to close a hair above 14. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

What’s going on with Apple Inc. (NASDAQ:AAPL)?
It used to be that investors couldn’t get enough of Apple Inc. (NASDAQ:AAPL) . Now, the stock appears friendless. Today, for example, the shares lost 2.5% while the broad market advanced 0.5%. That decline produced a new 52-week low and put the company’s market capitalization below $400 billion.

According to the folks at Business Insider, star bond fund manager Jeff Gundlach predicted last year that the stock would hit $425, so they went looking for a follow-up comment (the shares closed at $420.05 this afternoon). Here’s how he responded:

AAPL over the last six months offers a textbook case study in market behavior and effectively debunks efficient market theories. The weakness is all the more remarkable because it has occurred within the context of a strong overall US stock market.  SPX up 5% since September 19, 2012 and AAPL down 40%. [Note: SPX refers to the S&P 500.]

Is Apple Inc. (NASDAQ:AAPL) a counterexample to the efficient market hypothesis, according to which stocks are always fairly priced because they reflect all relevant information at any given time? I’m not sure, but I think it certainly points to herd behavior among investors that produces stock price momentum (positive or negative). Take a look at Apple Inc’s. (NASDAQ:AAPL) performance relative to the S&P 500 since the second quarter of 2012:

Source: AAPL data by YCharts.