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Sell Apple: Longs Could Be in For a Fall

It feels strange saying this, but Apple reportedly will match $50 wireless carrier discounts on iPhone 4 and 4S. TheStreet's Marek Fuchs offered solid reaction to the news:

Discounting, even for a great high-end retailer -- or consumer electronic maker -- tends to be a slippery slope. Once customers see a sale, their perceptions and preconceived notions begin to change. They start to expect a sale.... Apple is not a discount house, but don't discount the eventual impact that discounting might have.

The simple fact that Apple reportedly needs to clear inventory ahead of the iPhone 5 release should raise a red flag.

Couple this with a report from The Next Web that Apple is cutting hours and retail staff. If nothing else, take a moment to reflect on whether you're long and sitting on a hefty profit.

TNW offers several benign or bullish reasons for the rumored moves: Apple is offsetting its recent retail pay raises or Apple is laying the groundwork to revolutionize retail with self-checkouts, a focus on the Genius Bar, and online ordering for in-store pickup.

Again, maybe so. It might just be that when Apple introduces iPhone 5 next month it also announces groundbreaking changes to how it does retail. I hope this is the case.

As somebody who wants to see Apple continue to dominate in Steve Jobs' name, I hope the staffing cuts, along with the discounting, does not indicate preparation for another soft quarter.

When Apple reports results for July, August and September, it will include only a sliver of new product sales. Expect another underwhelming report. It's not like the current generation of iPhones, for example, are presently flying off of shelves. This much we know is true.

After last month's miss, most everybody shifted attention to the holiday quarter as guaranteed redemption for Apple. It's too squeaky clean of a storybook story to be true. Don't take a Hollywood ending for granted.

Since the earnings miss, AAPL is up about 10%. While it would not surprise me to see the momentum take the stock to new highs, proceed with caution if you're long.

What if all of this writing on the wall is not quite as bullish as most of the media and analyst community insists on making it out to be?

This might be the most pivotal time in the company's post-turnaround history. If the holiday quarter does not blow the doors off of estimates, AAPL could implode. It should make you uneasy that very few, if any, differences of opinion exist about iPhone 5 sales.

If you follow the crowd this time on AAPL, don't press your luck. Monitor your position closely and be ready to bail if IPhone 5 does not salvage Apple's recent stumble.

At the time of publication, the author held no positions in any of the stocks mentioned in this article.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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