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Pro: Apple's Stock Weakness Is The 'Pause That Refreshes'

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Pro: Apple's Stock Weakness Is The 'Pause That Refreshes'
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It was a lot easier for Apple Inc. (NASDAQ: AAPL) to sleep comfortably at night years ago than it is today. Apple's stock fell around 2 percent last Thursday and remains around $10 per share below its all-time highs of $164.94 amid reports of weak demand for the iPhone 8 and a lack of clarity for the iPhone X.

Apple's stock is in fact "very, very sick" and trading below its 50-day moving average, Larry McDonald, editor of "The Bear Traps Report" said during a recent CNBC "Trading Nation" segment. Moreover, the stock is trading at the same level today as it was in May, which implies it is lagging the "substantial" gains seen in many other tech companies.

Adding to Apple's iPhone 8 current woes is expectations for struggles in the international market as the U.S. dollar is expected to rise, he said. This creates a scenario where the risk-to-reward profile for owning Apple's stock at current levels is "poor" and the stock is due for a "drawdown — and that's what's coming."

Fortunately for investors, there are always two sides to any story, and a look at Apple's stock chart doesn't reveal the same bearish outlook, Piper Jaffray's Craig Johnson said during the "Trading Nation" segment.

Many technology stocks exhibit a similar partner of "advances, sideways consolidations that refresh and then another move higher," he said. And this is exactly what Apple's stock is doing right now, as there are no signs to indicate Apple's stock hasn't seen an end to its longer-term uptrend support. That support level coincides with its 200-day moving average of around $146 per share.

"Right now, you don't know if this is a pause that refreshes, and let me just say that's exactly what we've been seeing with this entire market over the past 24 months," he also said.

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Nov 2018BairdMaintainsOutperformOutperform
Nov 2018JP MorganMaintainsOverweightOverweight

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