Is Apple Inc. (AAPL) Stock Setting Up a “Sell the News” Scenario?

For better or worse, Apple Inc. (NASDAQ:AAPL) and its flagship iPhone are inextricably linked. It’s the device that catapulted the company to its iconic status, and catapulted AAPL stock 700% higher since the first iPhone debuted a little over a decade ago.

With that as the backdrop — and the release of what’s supposed to be the most expensive (albeit the best) iPhone just around the corner — it leaves current and would-be Apple stock holders asking one big question: Just how have Apple shares responded to previous releases of the iPhone?

The answer is, it depends. Generally speaking, the launch of any particular iPhone has either been very good or very bad for the stock. And, alarmingly, the “very bad” scenarios tend to pan out shortly after AAPL stock has done what it’s done over the course of the past several weeks.

Here Comes the iPhone 8

Technically speaking, the company hasn’t confirmed that the launch event scheduled for September 12th will include the unveiling of the next iPhone. On the other hand, in that almost all of the recent iPhones have debuted that month, and in light of the fact that no other unveilings have been scheduled, yet, most everyone agrees the upcoming event is the proverbial big Kahuna.

It promises to be a technological marvel.

Though we’re still only working with rumors, with the reveal date nearly here and Apple hammering out the final details, the rumors are increasingly credible. Indeed, at this point it would be surprising if the device didn’t incorporate a curved LED screen, wireless charging, some sort of facial or retinal scanning feature in addition to some impressive augmented reality capabilities.

It’s also going to come with a steep price, however. Though Apple hasn’t officially said a word about this matter, either, the odds-on expected price tag for the iPhone 8 will be $999.

It’s not as crazy as it sounds when you learn that the Galaxy Note 8 from Samsung Electronics is similarly priced, and still being purchased. On the other hand, the Galaxy series was never as strong of a seller as the iPhone was, making it difficult to make assumptions about one based on interest in the other.

Whatever the case, one can’t help but wonder if seeing the four-figure price tag for the world’s most popular smartphone will be the catalyst for the world’s consumers to stop and collectively ask, “What are we doing paying this kind of money for this device?”

One whiff of that sentiment could be all that’s needed to pull the rug out from underneath an already-vulnerable AAPL stock.

AAPL Stock Is Playing With Fire

Up 80% since the middle of last year and creeping into record-high territory in early August, there’s no denying the market is very bullish on Apple shares headed into the launch of the iPhone 8. Thing is, we’ve seen similar optimism on new iPhones in the past. Despite their smashing success, not all of them prodded the stock higher. In some cases, we saw a distinct “buy the rumor, sell the news” “phenomenon.”

The chart marks the unveiling dates for all the iPhones since 2011.

Apple iPhone release dates
Click to Enlarge

Interestingly, when AAPL stock is down and pressing into the lower edge of a rising trading range (framed in red), the release of a new smartphone seems to fan bullish flames. Conversely, when — or shortly after — AAPL share are at or have recently bumped into the upper boundary of that treading range, the release of a new iPhone results in selling pressure.

It’s also possible the unveiling of new iPhones has very little to do with the stock’s ebb and flow. Rather, Apple shares are simply trapped in a bullish but wide range and merely traveling from one edge of that range to the other.

Whatever the case, with the stock presently at the upper end of a trading range right on front of what could be an unexpectedly lackluster response to an oddly-expensive phone, wise traders will be prepared for the distinct possibility of a pullback.

Even without a sizeable pullback, though, there doesn’t appear to be much room left for further gains.

Bottom Line on Apple Stock

Even bringing up the possibility that Apple is fallible and the iPhone 8 is a tough sell at $999 is sure to raise the ire of AAPL stock owners and faithful fans of Apple products, so one final crystal clear point has to be made… this isn’t an indictment of the company’s future, nor a suggestion that Apple is doomed.

This is just an acknowledgement that stocks can and do disconnect from their underlying company’s reality from time to time, and when they do, it can hurt. In fact, it’s happened for Apple shares more than a few times since 2011, for better and worse.

And right now, AAPL stock looks ripe to disconnect in a bearish manner, as profit-takers are looking for a reason — any reason — to lock in their gains. The bullish chatter floating in the market’s ether about Apple now was the same kind of bullish chatter heard in late-2012 and the latter half of 2015 too, and the rhetoric was wrong then.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC