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Why Buying Apple At Current Levels Makes 'Very Little Sense'

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Why Buying Apple At Current Levels Makes 'Very Little Sense'

JC Parets is a weekly guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Eagle Bay Capital Founder JC Parets said Thursday that he thinks buying Apple Inc. (NASDAQ: AAPL) "makes very little sense" from a big picture, long-term perspective.

Parets said that the chart is misleading because on a short-term timeframe, the chart looks to be in a bullish continuation pattern. However, the stock has traded within that pattern for quite some time, causing Parets to argue that if the stock were going to move higher, it would have by now. Instead, Apple has "gone absolutely nowhere."

Related Link: Is Apple The Ulimate Bully?

Instead, Parets is looking at a long-term trend channel that has constrained the stock. From that perspective, "Apple is a terrible buy here."

Parets' analysis is also based on Fibonacci levels.

"If you're not looking at these Fibonacci levels, you're doing yourself a disservice," Parets said. In January, Parets was looking for Apple to move higher – from the $110 level towards $129. The stock hit that level, even pushing as high as $134.54. The stock is mired at $127.80.

A break lower, Parets argued, would have negative implications and would be "very, very bad." As Apple is such a large component in many of the indexes, it may also have negative implications for the broader market.

Year-to-date, the stock has done quite well, gaining 15.8 percent versus an 8.4 percent increase in the Nasdaq 100.

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