U.S. equities mostly finished higher on Tuesday in quiet but choppy trading. Large-cap stocks are still trying to overcome epic resistance near the 18,000 level on the Dow Jones Industrial Average, which it crossed for the first time since July on Monday.
But watch for selling pressure to emerge on a series of disappointing first-quarter earnings reports as well as a media blackout by the Federal Reserve ahead of its policy meeting later this month.
If so, keep an eye on these three stocks for possible short-side plays: Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC) and Nike Inc (NYSE:NKE).
Apple Inc. (AAPL)
AAPL shares are on the slide, in a clear downward violation of a strong four-month uptrend. Shares have been under pressure since last summer as investors have slowly lost faith. True belief in the Apple ecosystem, its innovation cycle and the performance of CEO Tim Cook have been replaced with nagging fears.
Worries its lost its innovative touch. Worries over its performance in China. Worries over the saturation of the smartphone market. Worries that new products, such as the gaming focused Apple TV, Apple Watch, and iPad Pro, have been duds. And now, worries that the company is about to bungle the eagerly awaited rollout of the iPhone 7 later this year by going with only incremental updates — saving the release of a new form factor until 2017.
In response, I have recommended the May $107 AAPL puts to my Edge Pro subscribers.
Intel Corporation (INTC)
INTC was set to open 3% lower on Wednesday after reporting an earnings beat but a revenue miss, cutting forward guidance and announcing 12,000 job cuts (around 11% of its workforce). The stalled PC industry remains a drag as the company tries to reorient toward cloud computing and internet-of-things products.
It’s clearly not working, however, based on the company’s own forecasts for the rest of the year. Revenue growth is now expected in the mid-single digits (vs. mid- to high-single digits previously) alongside a drop in profit margins.
Nike Inc (NKE)
In a sideways consolidation since September, NKE shares are threatening a breakdown here as they stall below their 50- and 200-day moving averages.
The catalyst for the latest bout of weakness was some cautious commentary last week on the footwear industry from analysts at Cowen. There has also been rumors of a possible acquisition deal for Fitbit Inc (NYSE:FIT).
On March 23, the company released a mixed quarterly report beating on earnings of 55 cents per share (vs. 48 cents expected) but missing on revenues of $8.03 billion (vs. $8.2 billion expected).
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
