The latest was a price target cut Wednesday by analysts at UBS, who lowered their target to $115 from $120 per share, citing weak iPhone sales.
TheStreet's Jim Cramer has continued to defend the stock, a core holding of his Action Alerts PLUS portfolio, even though AAP cut its price target recently on Apple, too. Cramer agrees with CEO Tim Cook that Wall Street has overreacted to the tech giant's latest earnings.
People love Apple products, Cramer said. "Apple's remarkable, commanding customer loyalty fails to align with the futile vision propagated by investors and sell-side analysts alike. Amid uncertainty, we believe Cook's unwavering confidence in his company's strategic vision supports our long-term thesis," he said.
However, from a technical perspective, the tech giant has lost all of its key areas of support. Its chart now shows a possible decline in of about 10%, falling to around $83 per share.
AAPL closed Wednesday at $92.51, down 1%. The shares are now down some 12% so far on the year compared with a 1% rise in the S&P 500 (SPX) index. Based on Wednesday's closing price, the stock has dropped almost 27% in the past 12 months and now trades in extremely bearish territory, down 30.42% below its 52-week high of $132.97.
Take a look at the chart below, courtesy of TradingView.
A stock enters bearish terrain once it is 20% below its 52-week high, meaning AAPL is down an additional 10 percentage points below that critical threshold (solid blue line). What's more, the shares are trading well below their critical 20-day ($100.45 - thin blue line), 50-day ($110.68 - pink line) and 100-day ($111.30 - yellow line) moving averages. Combined with analysts' price cuts and tepid demand for iPhones, the stock will continue to trend lower.
The chart says a decline to around $85 and below in now in the cards. From Wednesday's closing price of $92.51, there's a 10% gap (pink oval) to where the stock's next level of support will be at around $83 per share. It's at that point AAPL, which has made lower highs and lowers lows over the past the month, will begin to move higher, not before.
It's at that level the company could think to begin its massive buyback, which it recently increased to $175 billion. Until then AAPL is a short.
How to execute the trade: Sell AAPL short around $92 to $93 on Monday, using $95 as near-term resistance. If it breaks $95, exit the position with a loss and live to play again. The bet is the fear in weak iPhone demand, combined with uncertainty in China will heighten the pressure on the stock, breaking bellow the $90 support line to around $85 and possibly $83 in the coming weeks.