Back in late August, yours truly penned some pessimistic thoughts on Apple Inc. (NASDAQ:AAPL), suggesting AAPL stock was poised to take a tumble in the wake of the iPhone 8’s launch. I wasn’t suggesting that Apple was doomed, nor was I saying the stock would never rally again. I was simply warning investors that stocks often have a mind of their own — including Apple stock.
Merely bringing up the possibility that shares could pull back in the shadow of the debut of one great device and a preview of an even better one (the iPhone X) ruffled more than a few feathers. How dare I suggest the Apple share price would do anything other than rise, even though it had already rallied 80% since mid-2016?
Well, all I can say is: Have you seen the AAPL stock price today? At last check, shares were trading at $152.80 — down more than 5% since my warning and testing the waters of even lower lows again.
Even in the midst of the brewing weakness, though, I maintain what I said then — this pullback was going to happen no matter what.
Inevitable
In case you missed it, here was my first look at Apple stock from Aug. 28. My concern then was — and still is — Apple shares were bumping into a major long-term resistance line that capped all the major rallies going back to 2012.
Interestingly, although the buzz surrounding the iPhone 8 was palpable a month ago, history proved the stock was just as prone to selling off in the wake of a major product release as it was likely to rally. In other words, it had more to do with the chart and less to do with potential revenue than most investors cared to believe.
It’s not just a trading pattern that up-ended expectations, though. The current rhetoric has shifted to one that aligns with the falling Apple share price.
In a logical, rational world, the financial media would report corporate development without bias and traders would respond appropriately.
We don’t live — or trade — in a logical, rational world, though, and the headlines are more often than not tweaked to: (1) line up with the stock’s current direction, and (2) align with what the media thinks investors most likely want to read. That’s why we’ve seen more alarming headlines regarding AAPL stock than normal over the course of the past month or so. The chatter has turned bearish because that’s the hot story of the day.
Case(s) in point: TheStreet.com’s Why I Stopped Wearing My Apple Watch – and What That Means for Apple, Apple iOS 11.0.1 Starts Causing Problems and I’m already bored with the iPhone 8 Plus from CNBC.
These are headlines that would have resulted in a rain of wrath on their writers if put in print a month ago, when AAPL stock was on the rise. It’s funny how the tune can and will change when the stock takes a turn for the worse.
As it turns out, the media not only participates in the ebb and flow cycle for a chart — it contributes to it.
Bottom Line on AAPL Stock
There are still plenty of people out there working hard to connect the if/then dots, suggesting soft (or so it seems) demand for the iPhone — any iPhone — is not only the reason the AAPL stock price is sliding, but that it somehow suggests Apple’s best days are behind it. Conversely, more than a handful of analysts like RBC analyst Amit Daryanani believe consumers aren’t interested in the iPhone 8 because they’re holding out for the more expensive iPhone X, due out sometime in November.
Maybe Daryanani is right. Or, maybe he’s wrong and most consumers have just fallen out of love with the very idea of a very expensive must-have upgrade. The truth is, nobody really knows. The other truth is it wouldn’t have mattered. One of the quirks of story stocks like AAPL stock is they can take on a trading life of their own. In these cases, rather than the dog wagging the tail, the tail wags the dog.
Thing is, to investors willing and able to take a step back and look, it becomes pretty clear the story-driven nature of Apple stock could have told you the headlines would turn sour right after the stock did — as has been the case for years now. The new iPhones actually had very little impact on how the stock has performed — or failed to perform — of late.
As for the foreseeable future, there’s still plenty of distance before the lower end of the long-term trading range is met again. Don’t be shocked if the story repeats itself in full, sending the stock much lower like it did in 2012 and 2015.
Right or wrong, it’s all just a chess game.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.
