Is It Time To Short Apple?

Is that a sacrilegious thought? Let me say I'm a huge fan of Apple Inc. (NASDAQ:AAPL) and have been since I wrote my book "Right on the Money" on a Mac some 20 plus years ago. But that was when Steve Jobs was changing the world with his WYSIWYG (what you see is what you get) interface and that silly little mouse that now is an ubiquitous part of our lives.

Times have changed and Steve Jobs is no longer with us, but I'm sure he would be happy to see that his company has overtaken Microsoft as the most valuable corporation in the world to the tune of some $750 billion. We all know that since Steve has passed on, the baton was handed to Tim Cook. Tim Cook is a very talented executive and certainly a master of the supply chain. But does Tim Cook have enough imagination to drive innovation forward in creating new and exciting products?

Will you buy Apple’s new smartwatch?

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Under Tim's leadership, Apple stock has certainly moved higher, no question about that, but what has Apple done lately? We will find out on Monday the 9th, when Apple will unveil a new product. Apple is rumored to be launching its new Apple watch and some upgrades to existing products.

Let me say I would like to be wowed by the Apple watch, but there is a little company called Pebble that has sold more smart watches than all the other smart watch makers combined and that company didn't even exist two years ago. Pebble is led by a very bright and focused individual much like Steve Jobs, who has a vision of what wearables can be and can do. His name is Eric Migicovsky and at 28 years old is the founder and CEO of Pebble. I'm sure we will be hearing a lot more about him and his company in the future. Could this be a David and Goliath technology story as mighty Apple may be felled by a Pebble?

One of the major things that Apple has going for it is its huge ecosystem that has all of their computers communicating with each other. Macs talk to iPads, talk to iPhones and soon will talk to the Apple watch. That alone means that Apple will sell a lot of watches, but I don't think Apple will sell as many as they think they're going to sell and here's the reason. I don't think that young people are going to be wearing watches anytime soon. They always have their phones out looking at texts and emails, so do they really need something else to look at on a tiny screen? I think not. Yes, there will be exceptions, but they will be in the minority.

Apple is coming out with a line of watches rumored to proceed from the mid-$300s up to $10,000 for the top-of-the-line gold model. I'm not sure I know too many people who would spend $10,000 on a piece of technology that will probably be upgraded within 12 months, but that's another story.

A Cool Factor For Apple

The one thing that the Apple watch does have going for it, in my opinion, is the brilliant design guru, Sir Jony Ives. Jony worked brilliantly with Steve Jobs for so many years creating many of the legendary products that we have all come to know and love. Jony is responsible for the design of the Apple watch.

Not A Cool Factor For Apple

On Friday, it was announced that Apple will be one of the major components in the DOW replacing AT&T. This to me is like the kiss of death, as it seems that only really old non-innovative companies are involved in this particular index. It has long been rumored that Apple has been losing its cool factor, being inducted into the DOW would seem to confirm that loss of coolness.

The move, which had been widely expected, is a reminder of the soaring valuations among consumer-driven technology and social media companies like Google Inc. (NASDAQ:GOOG), Facebook Inc. (NASDAQ:FB) and Twitter Inc. (NYSE:TWTR).

I need further evidence and technical confirmation that Apple is indeed in trouble. My concern is perception. If the new Apple watch does not sell well, it starts getting blasted in social media and that will cause perception problems for this widely held stock.

As always, I am going to rely on the Trade Triangles to point the way for Apple. Only time will tell and depending on how you look at the market, whether it's in the next 3 to 6 months or 3 to 6 years, Apple will be around providing great trading opportunities for investors and traders alike.

Tell us what you think about Apple and its new watch. Would you buy one?

Please feel free to leave your comments below this post, and we will do our very best to answer all of them.

Have a great trading day everyone.

Every success with MarketClub,
Adam Hewison
Co-Creator, MarketClub

3 thoughts on “Is It Time To Short Apple?

  1. From past experience the Apple stock seems to often dip at the time of a new release..and then resumes its ride back up. I think the same will happen in April when the iWatch is released. Apple are also going to have a new laptop available which based on my visit to the Apple Store today is going to be in demand as it is a 12" MacBook that is thinner than the existing MacBook Air....and I think for the money consumers will find that a think lightweight laptop can offer more functionality than a tablet....I for one will be keen to see it as I prefer a laptop on the Train to trying to use an iPad.

  2. Australia 4 corners program just had a expose on how apple condones the abuse of factory workers in china who work on its products. maybe this is a top for apple. it seems to me that when icons are being pulled down in the media (legitimately), where previously they could do no wrong, that this is common with a top in their fortunes, eg/tiger woods, Rolf Harris,jimmy saville, liberace,

  3. I have no interest in smart watches or in shorting Apple. A smart watch might be a better purchase in the long run, than to throw money away shorting Apple, though.

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