• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Apple Stock: What Matters Most Is What Happens Wednesday

Here's how to play it after the tech giant's coronavirus warning.
By TIMOTHY COLLINS
Feb 18, 2020 | 02:10 PM EST
Stocks quotes in this article: AAPL

If the Apple (AAPL) warning really surprised you, then you'll probably enjoy the "surprise" ending of the movie, Miracle, about the 1980 U.S. Olympic hockey team.

It was only a week ago, the headline for my Apple story on this site read: "The Coronavirus Will Have Some Impact on Apple in the Current Quarter."

I said, "If the virus spreads and the shutdown continues, then that time frame will lengthen to at least two quarters."

Let's compare that to Monday's headline: "Apple Warns for March Quarter Due to Coronavirus."

I'm not a genius. I'm not Carnac the Magnificent. I'm not The Amazing Kreskin. This wasn't magic and pretending like this announcement was a surprise is comedy.

If this is the excuse you needed to sell, then good on you. Having a reason to sell when the market is moving in a straight line higher is sometimes the hardest thing to find -- and selling becomes the hardest thing to do.

It can cause us to remain stuck in a position for far longer than what is necessary. But don't confuse this with a lack of demand or something fundamentally wrong with the company.

Could Samsung sneak some demand away from Apple or inch ahead because it doesn't rely heavily on China? Absolutely, but this is also something already known.

What matters most is what happens Wednesday. Take a gander at the daily chart of Apple going back to December 2019. Three previous times we've watched the stock gap lower. Each time, after a gap lower, the shares have gapped higher the next day. From there, they pushed higher the day after as well.

Where does that leave us?

If Apple gaps higher Wednesday, then I think you buy the open, and play it long the next 2-3 days using a trailing stop of the previous day's low. The $315 level appears to be the long-trending support. If that fails, then I could see Apple testing the 50-day simple moving average (SMA) which happens to sit right near a nice, large round number of $300.

Tuesday's low acts as a great stop. Even if the stock opened at $320 Wednesday, going long means a trader would look at risking $5 for an upside of $10 to $15 based on the previous three patterns, three patterns that have all repeated the same thing.

I wouldn't overthink this. If your time frame is only a few weeks, even a couple of months, then I would expect volatility and pay attention to the technical picture, but if you are a long-term investor in Apple, I don't think this news changes anything. It's a fundamental blip.

If the supply constraint continues for several months, then I would expect Samsung and Android to steal some business that Apple won't recover, but again, I think we are talking a handful of basis points and nothing significant.

I'll focus on Wednesday. If there is a gap higher, then I'll take the long trade. If the stock breaks below $315, then I'll look to $300 for the next support level, but I'm still not ready to get aggressively short in this market.

(Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)

Tim Collins provides options trade ideas each day on Real Money Pro, our sister site for active traders. Click here to learn more and get great columns, commentary and trade ideas from Tim Collins, Mark Sebastian, Paul Price, Doug Kass, and others.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Collins had no positions in any securities mentioned.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long AAPL.

TAGS: Investing | Markets | Stocks | Technical Analysis | Stock of the Day

More from Stocks

Traders: Keep Your Fingers on the Trigger and Targets on a Bottom

James "Rev Shark" DePorre
Mar 4, 2021 4:39 PM EST

As the correction goes on, here's what to do now.

There's Nothing Pleasant About the Current Action

Timothy Collins
Mar 4, 2021 3:00 PM EST

The next good sized bounce in SPAC names, and maybe ARKK names, might be the last exit off the bagholder highway.

Nike's Charts and Indicators Are Still Bearish

Bruce Kamich
Mar 4, 2021 2:20 PM EST

Avoid the long side.

Listen to Mr. Market, Not Mr. Powell

Jim Collins
Mar 4, 2021 1:56 PM EST

Let's look at bonds, rates and, especially, inflation for a true picture of what's going on, and where to put your money.

Powell Supplies the Bears With Ammunition

James "Rev Shark" DePorre
Mar 4, 2021 1:20 PM EST

Picking good stocks is not going to help you much in this market right now.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:53 AM EST GARY BERMAN

    Nasdaq Composite: Some Backing and Filling Is Here

    As today is the 4th day of the month, it seems lik...
  • 07:59 AM EST PAUL PRICE

    Fabulous News on United Natural Foods (UNFI)

    The major potential risk factor for , its contrac...
  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login