Sell Apple: Longs Could Be in For a Fall

NEW YORK (TheStreet) -- The recent rise in Apple's (AAPL) stock price could end up burning longs who do not take profits. While I certainly could be reading it wrong, the writing is most definitely on the wall.

Before you tell me I hate Apple, please note that I wrote this article on the new MacBook with a Retina display I received Monday. With the exception of the Internal Revenue Service, you typically do not give such a large sum of money to an organization you dislike.

I love Apple. Because of this admiration it pains me to see the company veer from the course Steve Jobs set for it. It hurts even more to watch so many people -- shareholders, the media, analysts, fanboys and fangirls -- refuse to connect the now-painfully obvious dots.

A Sampling of the Writing on the Wall

Shortly after Tim Cook took over for Jobs, he caved to shareholder pressure and decided to institute a dividend and buyback. In the rearview mirror of history, that will go down as the symbolic beginning of the end.

Now, as Apple begins paying that dividend, several things are taking place that could spell trouble.

The dividend and buyback foreshadowed what we're seeing more and more of each day. The gap between Apple and everybody else appears to be closing. Micro and macro factors that once impacted everybody except Apple now cause Apple to make adjustments we never would have seen in the Steve Jobs era.

The most obvious example that the world continues to ignore is the forthcoming mini iPad. Bulls spin it as Apple taking control of yet another market. While that may very well happen, it's a short-term grab of market share that sets off flares of long-term concern.

When Apple no longer operates in a class of its own, it begins to cede control and chip away at its own greatness. As I have argued for months, it's on the road to becoming just another very good company.

The latest missteps from Tim Cook do nothing but accelerate the trend and send signals that Apple is concerned about the current quarter.

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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