Apple Stock Poised For A Sell-Off--Miller Tabak

Apple Inc. (AAPL) has been on a tear so far in August, surpassing the $1 trillion point in market capitalization and setting new highs multiple times in the month.  For the year shares of the Cupertino, California iPhone maker are up 25% with its one month gain standing at more than 11%.

But the good times may be coming to an end for Apple investors, at least in the short term, if Miller Tabak’s call proves true. Matt Maley, the equity strategist at the investment firm told CNBC the ride in Apple’s stock this month is setting the stage for a pullback, which Maley said would “actually be healthy.”  The strategist pointed to the relative strength index for Apple which is slightly over the 70 mark. According to CNBC, a reading of more than 70 indicates shares may be too pricey. Apple started the year with a score under 40 and much closer to 30, which indicates a stock has been oversold. "It's a 62% premium to its 200-week moving average. That's the same level it reached in 2015 just before the stock pulled back for a couple of weeks there," said Maley.  (See more: Apple Stock Is Alerting Bullish Trading Activity.)

Stock Has Been Gaining Since Earnings Report

Ever since Apple reported fiscal third-quarter results in late July the stock has been gaining. The company was able to report a big beat on the earnings per share and iPhone selling price fronts, quelling fears of a disastrous June ending quarter. Apple reported of $2.34 a share compared to the $2.18 a share Wall Street was looking for while revenue of $53.3 billion was also higher than the $52.34 billion consensus. Average selling prices on the iPhone of $724 was a big jump from a year ago driven by the iPhone X which starts at $999. Even after Apple surpassed  $1 trillion in market capitalization on August 2, the stock has continued to rise, setting the stage for what Maley sees as an ensuing pullback. (See more: Apple CEO Is Set to Receive 280K Shares: Report.)

Maley Isn’t Alone  

But Maley of Miller Tabak isn’t the only one warning Apple’s stock could see some declines. New Street Research recently downgraded the company's shares,  arguing the company is still at the mercy of boom and bust cycles in the smartphone market.  "Demand brought forward this year will drive an 'air pocket', and the introduction of a lower-price premium OLED phone won’t be enough to make up for the shortfall," wrote New Street Research analyst Pierre Ferragu in a note to clients. The analyst noted shares of Apple will rise and fall on the iPhone cycles and that’s even with higher prices offsetting elongated smartphone replacement cycles.

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