17Jun10:43 amEST

Big Apple a Replay of Big Blue for the Big Hustler

The news out of China this morning almost seems ancillary to the main issues facing AAPL stock.

We went short Apple yesterday inside Market Chess Subscription Services, not because we knew issues would arise out of China today, but rather because the stock remans in a clear downtrend--Lower highs and lower lows--since last summer for one of, if not the, premier multinational brands. 

Despite Warren Buffett's recent investment into AAPL, which smacks of the same type of deviation from his normal don't-touch-tech-or-what-you-don't-know rule which was on full display with IBM, Apple is now giving back a chunk of those Buffett Bounce gains. 

I suspect, much like IBM ("Big Blue"), there is a new batch of AAPL longs who either added or initiated positions on the news of Buffett's buys. But as I have argued before that is a false sense of security for a variety of reasons. 

When IBM was over $200 a few years back, plenty of "value investors" used the Oracle of Omaha's position in the name as argument for some type of imaginary "put" beneath the stock, whereby it simply could not drop (The stock then completed a massive head and shoulders bearish topping pattern and fell to just below $117). 

Whether or not the same type of scenario plays out with AAPL remans to be seen. But just as with IBM we have technically-damaged charts for maturing brand names in an arena Buffett has openly admitted is outside his wheelhouse, along with plenty of value investors who conveniently piggyback Buffett. 

As a trader, I am betting on the downtrend persisting to recent lows of $89, with a fairly tight cover-stop above $101. 

Stock Market Recap 06/16/16 ... Three Card Monte Market


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