Short term trade - Short on Apple!

Last week we have discussed Apple’s results and the fact that the stock price might face further downward pressures before resuming the uptrend.

It might sound controversial, but my current idea is to go Short the stock for the short term.

First of all, Apple is one of the few stocks that has not suffered much during the October rout in the markets and the drastic drop in price happened just last week after the earnings announcement.

Secondly, an important point mentioned in the call was the slowing growth in Emerging Markets in Apple products. This is very significant for Apple’s revenues going forward.

As we know, Apple decided to remove disclosure on units and the rationale here is that they know they will sell less products – If you are going to sell less products now, going forward it will of course affect the services business and also the demand for other products which are part of the Apple ‘family’ of products.

Over the world, many people now have a smart phone and thus growth was expected to falter. We can make an analogy to what happened to PCs years back. As soon as the product become common, sales for PCs declined.

It also emerged that Apple is now the most shorted stock in the US market – it had recently surpassed Tesla and is highest from all the other tech giants.

Of course, Apple is the biggest company in the world and I am very bullish long term. Personally however, I think that the negative aura surrounding Apple will continue at least for the short term and we might be able to gain from this all of this.

Final target price will be around $190 (200 MA acting as resistance) with first target at $200.

 

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