We’ve opened a new bearish trade on Apple (AAPL).
AAPL bounced slightly higher Tuesday along with the rest of the market, but we don’t see a lot to get excited about in AAPL’s future. The company is holding its annual conference today (Wednesday, Sept. 9), at which it is expected to introduce a new member of the iPad family — a 12.9 inch iPad Pro — a new iPad mini and two new versions of the iPhone — the iPhone 6S and the iPhone 6S Plus.
Unfortunately for AAPL, none of these products are bound to be industry game-changers. Instead, they will each provide incremental improvements that will be viewed by many U.S. consumers as “nice to have” but not “must have” features, which means demand for the products is not likely to generate the same dynamic sales growth that AAPL investors have grown accustomed to.
At the same time that growth rates in the U.S. are dropping from insane levels to merely exceptionally strong levels — let’s face it, AAPL is still the 800-pound gorilla in the space, it’s just not experiencing explosive growth — expected growth rates in China are still up in the air. Not only is the Chinese economy continuing to show signs of slowing, but AAPL is facing an increasing number of legitimate competitors, like Samsung, Xiaomi and Huawei.
During the past few years, AAPL’s stock has not performed well following the company’s annual meeting. It seems to follow the “buy the rumor, sell the news” strategy quite well. We expect the same thing to happen this year. We expect the stock to drop down to the bottom portion of its recent consolidation range below $110.
‘Buy to open’ the AAPL October 110 Puts (AAPL151016P00110000) for a maximum price of $4.80.
We also continue to hold the Under Armour (UA) calls we recommended last week and may use any strength to take profits this week.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.
You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in their Advanced Technical Analysis Program.
