Traders Sell Apple Stock After Big Show

Apple Inc. (AAPL) enthusiasts lifted the Cupertino, California-based icon within 98 cents of the bull market and all-time high during CEO Tim Cook’s Tuesday unveiling of the new iPhone 8, iWatch and highly anticipated iPhone X. Sellers took control as soon as the presentation ended, dumping the stock more than five points in a classic bull trap that targeted weak-handed buyers. The turnaround has extended into Wednesday’s pre-market session, with the stock struggling to hold the $160 level.

This bearish price action makes perfect sense within the market’s altered reality, with the least informed players jumping onboard during a self-congratulatory marketing event rather than acting on technical or fundamental catalysts that support higher prices. Reversal mechanics also matched the current trade setup, with the stock grinding through the sixth week of a test at five-year channel resistance above $160. (See also: Apple Unveils iPhone X, 8, New Watch, Apple TV 4K.)

Apple suppliers including Cirrus Logic, Inc. also reversed, but those issues face greater headwinds than their benefactor, failing to post new highs since June despite a high-tech bull market that has lifted the Nasdaq-100​ to an all-time high above 6,000. This group could attract aggressive short sellers in the fourth quarter if quarterly results in Apple’s Oct. 24 earnings report fail to match iPhone hype. (For more, see: Apple’s iPhone 8 Glitz May Not Lift Its Suppliers.)
Apple stock reversed after the big marketing event, trapping weak hands while adding to evidence of a longer-term top. …read more

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