When an Apple rumor becomes a stock realityThe stock market seems inexplicable. In June, when Engadget posted a memo, later proved fake, about delays in the iPhone launch that later proved false, Apple shares sank but instantly recovered. Yesterday, when TheStreet.com ran a story based on a supposed Wall Street report on iPhone production cutbacks, shares dropped 7 percent — and dropped further today, despite a thorough debunking by CNBC's Jim Goldman and Business 2.0's Phil Elmer-DeWitt. Why the difference?

First, a caveat: Fortunes have been made and lost trying to suss out the psychology of the stock market, and if I truly understood it, I'd be working on Wall Street. But, like a psychic reading tea leaves, every so often, I might glimpse a pattern that fits the situation.

Apple shares have run past most analysts' targets and, some believe, past the economic realities of how Apple can perform. The rumors sweeping Wall Street of cutbacks in production of iPhones — from 9 million to 4.5 million — are just a sign that people are looking for a way out of their own overblown expectations. Apple has long said it expects to sell 10 million iPhones next year. Not this year.

What's ludicrous is that anyone believed that Apple, famous for its lean supply chain and careful inventory management, would have put in firm orders for 9 million iPhones in the first place. If there are any cutbacks being made, it's in Wall Street traders' lurid fantasies. And as they rein in their imaginations, they inevitably rein in Apple's high-flying stock.

(Chart by Yahoo Finance)