Now, scuttlebutt has it that Apple will introduce three new iPhone models -- a 5.8-inch and 6.5-inch OLED model, as well as one with a 6.1-inch LCD screen. Personally, I wouldn't know an OLED screen from a screen door, but I do know how to read a chart, and it's obvious that investors have run Apple's stock price up in anticipation of this event.
However, it's also obvious that trade-war jitters have impacted Apple shares over the past week. Apple made a government filing Friday that outlined potential damages that the firm (and ultimately the U.S. consumer) could face from President Donald Trump's proposed new tranche of $200 billion in tariffs on Chinese imports. For those unaware of it, Apple manufactures most of its products in China, including the iPhone's various iterations.
The Wall Street Journal reports that 10,000 people work directly for Apple in China, while the firm indirectly creates roughly 3 million Chinese jobs. Obviously, the president wants those jobs moved to America, and where this ultimately goes creates uncertainty for shareholders.
Apple has pledged to contribute $350 billion to the U.S. economy over five years, thanks to the change in corporate tax laws implemented this year. Foxconn, the Taiwanese electronics manufacturer and a large Apple supplier, has already committed to a new $10 billion plant in Wisconsin. That plant isn't currently slated to produce Apple products there, but I'm sure Trump has his eye on this.
For now, I'll rely on Apple's year-to-date chart for guidance:
The chart above shows that Apple's momentum has finally turned downward after the stock's incredible August run. Even though AAPL is still trading at just 16x next year's earnings, the name experienced a turn lower in its daily Moving Average Convergence Divergence oscillator (MACD). Its nine-day exponential moving average (EMA) actually went negative, as did Apple's Chaikin Money Flow (CMF), which threatening to kiss zero. The stock's Relative Strength Index (RSI) also finally left an overbought condition.
However, it's easy to see on the chart above that Apple has regularly responded to pressure at or just below standard Fibonacci retracements. What's also plain to the experienced eye is that the algos trading this name have maintained the central trend line of a nearly eight-month-old Andrews' Pitchfork model as a pivot. This means that this line acts just as much as a "gravitational force" as it does as a support or resistance line.
I'm Playing Apple with Puts
My thought is that given the current two-way headline risk regarding Apple, you're better off not adding exposure in either direction at or close to current prices. Instead, I'm short some AAPL November put options -- and given the potential for an increase in some put premiums Monday, I'll likely add to these positions (albeit carefully).
November $210 puts closed Friday at $5.50, while the $200s ended at more than $3 and the $180s at more than $1. My guess is that those values will only increase on Monday.
A longer version of this column appeared at 7:35 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts each trading day.