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Has Apple Stock Made A Long-Term Top?

This article is more than 6 years old.

On Sept. 20, Apple plunged more than $5 intraday, breaking an important support line. At the same time, my “sell” signals that came in early September were confirmed. Here is the short-term (daily) chart:

Since the high of Sept. 1, the stock has lost approximately a big 9.5% of its value, or about $80 billion.

After such a sharp decline, there is usually a snap-back rally. The “bargain hunters” will come in. Be careful if that means you. Snap backs are often traps. I use Fibonacci numbers to predict the retracement.

Other times over the past years there was a well-organized effort to trash the critics, not with facts, but with four letter words. I became a target when I pointed out declining market share, lack of innovation, copying features long available on the Galaxy phone, predicting the disappointments with the Apple Watch, Apple Pay, that China sales would not grow, etc.

However, on Sept. 20 there were dozens of negative media reports on Apple’s new products. What a surprise! Does that mean the media is no longer careful about offending Apple, a big advertiser? Some media reports called it “sour Apples.” They write that there is not much change, ‘not worth upgrading,’ a glitch in the watch, etc.

For years the reason most iPhone users gave for sticking with that phone was the ecosystem. It was difficult to leave if you had other Apple devices. I gave up the ecosystem about five years ago when I got tired of what I called “Apple arrogance.”

Mark this month on your calendar. I believe Apple’s famous ecosystem will now start to crumble. USA Today Sept. 20 headlined “Ditch your iPhone” (referring to Apple Watch no longer needing an iPhone close by to use it).

Apple may now go the way of Sony years ago as I had predicted in a Forbes column some time ago. IPhone owners will now start looking at all the alternatives. Many competitors offer more and better features, more innovation, at lower prices, just like Sony a long time ago.

Sony abused its customer base, just like Apple. Look at what Apple calls exciting innovation: a wireless charger. These have been on the market for Android phones for at least six  years or so for less than $50.

Samsung Galaxy had the superior OLED screen about eight years ago. Apple is now offering it (made by Samsung) but you have to shell out $1,000 for the iPhone X. Apple finally improved its phone camera, but the Galaxy is still better.

This seems to be a poor time to come out with a $1,000 phone. Apparently, Apple wants to appeal to that very small segment, the snobs.

The reviewers, prior Apple fans, piled on criticizing the Apple Watch. I believe a smart watch will eventually be desirable. However, it will be produced by another firm, like Samsung.

Now you will see the conflicted analysts insisting that the critics are wrong. However, once the mood changes on anything, the change is long term. It feeds on itself.

In my firm, we use advanced technical analysis to confirm our fundamental work. Here is the longer term (weekly) chart of Apple.

Note the last peak on the price chart, which coincided with a lower peak on our technical indicator (bottom). That’s called a ‘bearish divergence.’ Because it is on the long-term chart, it has even greater significance. If the stock closes below 140, much lower prices will be seen over the next year. I will watch it closely.

Of course, the above is just my analysis at this time. If the facts change, such as a new direction for the company or a new CEO, I will change with it.

I called one important top in Apple stock in Sept. 2012. The decline started six days later and took the stock down 45%. Then Apple’s CEO had dinner with hedge fund ace Carl Icahn, who apparently taught the CEO about ‘financial engineering,’ such as stock buybacks to boost the stock. I dropped my bearishness on the stock, Apple started huge buyback programs, and the stock soared again.

Active investing works much better. For example, for years I looked at Microsoft but never bought it. I thought the company was mismanaged. I wrote that if/when the CEO were to leave, I would ‘back up the truck’ and buy the stock. Since he left, Microsoft has soared 190%.

In the markets, you must always adapt to new information. The universe is dynamic. You cannot just make a forecast, take a position, and then retire to the golf course for the next five years.

Must Read: 5 Standout Monthly Dividend Stocks To Buy

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