Is it crazy to keep betting against Apple?

In June of last year, we warned users of the free Likefolio app that the company could be in for trouble.  At $127/share, our warning consisted of the following points:

1.  Mention Volume is slowly declining

This isn't totally unusual… Apple does get a LOT of hype around product releases, and then generally has some down-time as the next phase gears up.  BUT– this decline is more pronounced than usual and isn't what you'd expect as their newest product launch (the Apple Watch) hits stores.

2.  Apple Watch is not a hit

We saw that the Apple watch wasn't going to be the homerun that analysts predicted… but now we are seeing a surprising number of negative tweets about the watch– and a much larger than normal indication that people are returning it for a refund.  

Its functionality is clunky and it locks up a lot.  People are tiring of it after a couple of weeks.  No killer app yet.

Again, that was from June of last year.

Since then, the stock has fallen over $30/share, and is "stuck" under $100:

What's the data saying now?

Obviously, LikeFolio's data has been a quality predictor on Apple.  What we're seeing, unfortunately, is more of the same:

Purchase intent volume is still depressed, especially on iPhone products.

The Apple Watch, while a massive hit in the smart-watch category, simply isn't garnering the kind of consumer enthusiasm that prior Apple product releases have been able to achieve.  

Apple needs a catalyst to truly drive consumer enthusiasm.  It could be a TV or a car or a home control system– we just don't know… but what we do know is Apple has a history of surprises just when it looks like the company is getting to be "normal."

So how do we play it from here?

We are going to keep doing what has been working well since our warning in June of last year, and continue to position bearish against Apple.  BUT– with the understanding that this is one of the best companies in the world that could provide a major bullish catalyst at any time. 

So we play it bearish with an absolute commitment to limiting trade risk and keeping trade duration reasonable.

In today's LikeFolio broadcast, we go through this analysis in depth and provide concrete examples of how we can use the social data clues to take a bearish position on Apple while still avoiding the crazy risk associated with shorting the stock.