“That was an ugly trade,” said Joe Kinahan, chief derivatives strategist at TD Ameritrade, in the report. “It was a cheap direction bet on Apple earnings that went bad.”
However, some technical analysts see support for Apple at the so-called Fibonacci 38.2% retracement line from the September high of $705.07 a share.
“Sentiment for the stock is also now very low. Every analyst and their dog seem to be rushing to downgrade the share, the very same analysts who throughout last year, and then at the highs, insisted that their clients buy the share,” says Tarquin Coe at Investors Intelligence.
“The chart also looks very broken, with a huge top evident. However, that appearance coupled to pessimism which is likely now at its nadir, provides the perfect setup for a short-squeeze, then recovery,” he wrote in a newsletter Friday.
The chart below shows the relative performance of the Nasdaq-100 (QQQ) versus the S&P 500 (SPY). When the chart is falling, the Nasdaq-100 is trailing the S&P 500. The recent underperformance of QQQ is due in large part to Apple.
Full disclosure: Tom Lydon’s clients own QQQ, SPY and AAPL.