Apple (AAPL) remains an investment of choice. The stock is cheap, with a price-to-earnings ratio of 10.5. Investors should beware however, that the stock's technical charts are negative. Shares of Apple may still decline, which will push its P/E even lower. The charts below show the key levels that must hold.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Cramer and Research Director Jack Mohr wrote on Friday that "the shareholder base has increasingly shifted from long-term fundamental investing toward short-term, event-driven trading (with the event being March- and June-quarter iPhone unit sales and associated gross margins). This has blinded the market to the company's long-term earnings potential -- a rash yet true reality that should weigh on the shares of Apple for the near future."

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

Apple closed Wednesday at $94.19, down 10.5% year to date. It is in bear market territory, 30% below its all-time high of $134.54, set on April 28, 2015, a month after the stock became a component of the Dow Jones Industrial Average (INDU) .

Owning a core position in Apple because it's cheap is not a bad investment strategy, but investors need to learn how to use technical charts and key levels to trade around this "never sell" position.

Let's that a look at monthly, weekly and daily charts for Apple to assess the risk and potential reward for the stock, both in the long term and near term.

Here's the monthly chart for Apple.

 

Courtesy of MetaStock Xenith

Apple has been a benchmark stock since bottoming in late 2008 into March 2009. The red line is the key monthly moving average, which ended April at $105.56. The up-trend off the low comes in at $86.14, which is the downside risk in May.

The green line is the 120-month simple moving average, which is the longer-term up-trend at $56.21.

The study at the bottom of the chart in red is the monthly momentum, which has been sliding since August. Notice that the flash crash low of $92.00 set on Aug. 24 has held at monthly lows in January, February and April this year.

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