Scott Redler: Reality Bites Apple, and What Could Happen Next

January 3, 2019
/ By Scott Redler

Yesterday after the close, Apple (APPL) gave a sales warning to give traders a big scare on the second day of trading in the New Year.

The headlines are what you might expect:

But how much of a surprise is this really?

Dozens of analysts have been cutting numbers, suppliers have been warning of weak demand, and of course, the stock's way off the $233.47 October high.

Now, I've been called an Apple (AAPL) permabull for years, but this is what I said in my 2019 Market Outlook Report:

This was the first time in years I didn't list Apple as a buy right off the bat.

As I wrote, "there’s still serious news risk with Apple, especially given that the trade war with China is unresolved."

And the trade war did just take a major toll on Apple earnings, and the stock is deep in the hole.

As I write this, Apple is around $144, so it's in a much more interesting spot, and it's time for some fresh analysis.

It's below the $146.59 December low. To relieve pressure -- and get 'the elevator' going back up, it has to reclaim that level.

If it stays below $146.59, next support is in the $140.40 area. Here's my updated chart for this morning:

Now we'll see if it can make a low in the first 5-15-30-60 minutes to try to fill some of the gap.

Or, does it grind down all day?

Pay close attention to which scenario plays out.

Since we're on the topic of tech, let's check out a QQQ chart too.

I'm watching $150-$150.88 today.

If that holds, it shows that traders aren't extrapolating Apple to the rest of tech. If it fails... then watch out!

For more of my analysis for 2019 and my top picks (including my short ideas for this year), click right here to check out the 2019 Market Outlook Report.

Positions Disclosure: As of January 3, 2019 at 9:32 a.m.. ET, Scott J. Redler is long GE, FB, SPY, TWTR, IWM, BAC

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