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Technicals Turn Sour as Apple Inc. (NASDAQ:AAPL) Falls Behind Market

Tim_Cook Apple Inc music

Apple Inc. stock have not been able to keep pace with the broader market since early summer, with the stock down 10% in the last six months compared to 1% down for the S&P 500. One trader, who relies more on the technical side of things for direction, believes the stock could continue to remain under pressure as we move into 2016.

Tim_Cook Apple Inc music

Apple facing resistance at $120

On Tuesday, speaking on CNBC’s “Trading Nation,” Andrew Keene said the stock had a “great run, but I think it might be time to take some profits.” Though the stock has been strong, it has not able to find a “buying momentum to take it throughout the end of the year” Keene said.

The analyst noted that Apple Inc. stock has been hitting the resistance since it revisited its July all-time high. The stock has been facing “trouble” to breach the $120 mark, Keene said, adding that if the stock is unable to break that level, then it has only one direction to move and, i.e. “lower.” Keene noted that Apple stock has been in a double top formation, suggesting the end of the bull market.

To benefit from this stance, the analyst is looking to the options market, where a “trader will buy a put, sell two lower strike puts, and buy a lower strike put all of the same expiration,” says a report from CNBC.

However, Wall Street views are in contrast to that of Keene’s. The stock has the consensus price target of $146.52, almost 25% higher than the Tuesday’s closing price, and an “overweight rating.”

Making investors happy

Whatever the case may be, Apple investors must be happy with the returns that they are getting with the stock. Apple, which has massive cash reserves, returned $17bn to the investors via buybacks and dividends in the last quarter, and has utilized more than $143bn of its $200bn capital return program. The firm has a sound balance sheet and has been able to grow its earnings year over year.

For Q4 of fiscal 2015, revenue for the firm was 36% year over year to $32.2bn. In the quarter, Apple Inc. sold 48.04m units of the iPhones, representing a rise of 22% year over year. Revenue from Greater China was up 99% year over year to $12.5bn.

On Tuesday, Apple stock closed down 0.81% at $117.34. Year to date, the stock is up over 6% while in the last one-month, it is down 2%.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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