Stocks of Apple Inc.(NASDAQ:AAPL) are trying to prepare a comeback after a troubled stretch took them into bear market territory the previous month. The downturn was not surprising to Paul Schatz, President of Heritage Capital. He has been calling for a sell-off of Apple since April of last year when he had foreseen a drop of 30-50%.
Apple shares plunged as low as $505 on an intraday basis in November. The stock has since recovered from bear status, but sentiment is damaged anyway.
Schatz said in an attached video that traders may still find something upside in Apple. However, the 20+ percent drop seems to be the first leg down in a multi-year decline.
Schatz sees any pop as a chance to sell a position. If anyone owns a lump sum of AAPL, Schatz thinks that it is time to lighten up holdings or use some options protection.
Schatz says that if anyone thinks that Apple is going to be sub-$500 or sub-$400 for each share, then he cannot get too insatiable on the upside since the upside will be fleeting.
Schatz is not ruling out the option of Apple’s possibility of pulling off a short position.
He said that shorting Apple may be close. Whatever resolution is made in favor of the fiscal cliff, it is going to create problems with the economy and Apple will probably come to power by force.
Not even a stock spilt or a special dividend would be enough to transform Schatz into an Apple bull. He thinks either case would result in an investor frenzy sending shares towering. That would be a bell ringing chance to unload power.
Schatz does not believe the persistent Apple growth story. He believes illogical enthusiasm has fueled the 220% growth over the span of 5 years. He is looking for an exit plan, not an entry one.