As stimulus checks continue to fuel the market rally, Satori Fund founder and portfolio manager Dan Niles has increased his short positions.
Apple Inc AAPL was one of Niles' biggest long positions, but it's now his largest short position.
What To Know: In the month leading up to a new product launch, Apple stock is up about 76% of the time, but on the day of the launch, the stock is down 76% of the time and tends to struggle for a couple of weeks, Niles said Tuesday on CNBC.
There was $3.2 trillion in federal stimulus over an 11-year period following the global financial crisis. There has been $4.2 trillion in federal balance sheet expansion since the COVID-19 pandemic began, Niles said. The daily amount of stimulus increased by about 10 times since the pandemic began, he added.
This rapid increase in stimulus has fueled the rally in stocks like GameStop Corp GME and AMC Entertainment Holdings AMC, as well as the surge in cryptocurrencies, Niles said.
The stimulus injection also affects the biggest names like Apple and that's why Niles is "nervous" about Apple stock moving forward, he said.
"We are short a basket of [S&P 500] names and Nasdaq names, as well as individual stocks like Apple."
What's Next? As stimulus gets removed, a market correction is looming, Niles said.
"We are trying to have as many or more shorts than we have longs at this point because we believe there's a 10% to 20% correction before the end of this year."
Apple's "California Streaming" event is set to kick off at 1 p.m. EDT.
AAPL Price Action: Apple has traded as high as $157.26 and as low as $103.10 over a 52-week period.
The stock is up 0.04% at $149.61 at time of publication.
Photo: courtesy of Apple.
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