Buy Apple (AAPL) Sell S&P 500 (SPY), Says Carter Worth
Tweet
Share
E-mail
Get Alerts SPY Hot Sheet
Price: $499.52 -0.21%
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
Join SI Premium – FREE
In the past 30 days, the S&P 500 (NYSE: SPY) has tacked on 7 percent. Meanwhile, shares of Apple (Nasdaq: AAPL) have declined by nearly 14 percent over the same period. This divergence creates opportunity, in the view of Oppenheimer Chief Market Technician Carter Worth, for "the simplest, most elegant, most straightforward trade available in the market over the next 3-5 months..." It's time to go long Apple and short the S&P 500.
From a technical perspective, proof that the S&P 500 is getting ahead of itself is shown in'‘the angle of the line', which Worth says is unsustainable.
"The angle of the line of the market's ascent on a week-over-week, month-over-month basis is not 'normal' at this point. And what really is not normative - in addition to the angle - is the lack of variance in the day-to-day trading. Simply stated, everyone is in agreement," said the technician.
This unusually behavior, in his view, spells trouble.
"At this juncture, we are seeing many individual stocks bid up in an increasingly unnatural way. The net effect is that most of the indices above have taken on an unnatural look," warned the analyst.
Besides the S&P 500, this 'unnatural look' is seen on a number of indexes, including the S&P 400 Midcap Index, DJ Composite 65 Index, and DJ Transportation Average.
The phenomena is also seen on individual stocks like Brunswick Corporation (NYSE: BC), Celgene Corporation (Nasdaq: CELG), State Street Corporation (NYSE: STT), Cree, Inc. (Nasdaq: CREE), and Netflix, Inc. (Nasdaq: NFLX). Once viewed as opportunities, Worth now thinks potential in these stocks has been tapped.
One stock noted by worth as not yet having been exploited is Genuine Parts Company (NYSE: GPC). Of course, the real prize is Apple.
"At this point, with AAPL having almost closed its January 25th 2012 gap of exactly a year ago, we think risk/reward is favorable on an outright basis AND relative to equities in general," concluded the analyst.
He thinks shares of Apple will reverse and head back toward $525.
From a technical perspective, proof that the S&P 500 is getting ahead of itself is shown in'‘the angle of the line', which Worth says is unsustainable.
"The angle of the line of the market's ascent on a week-over-week, month-over-month basis is not 'normal' at this point. And what really is not normative - in addition to the angle - is the lack of variance in the day-to-day trading. Simply stated, everyone is in agreement," said the technician.
This unusually behavior, in his view, spells trouble.
"At this juncture, we are seeing many individual stocks bid up in an increasingly unnatural way. The net effect is that most of the indices above have taken on an unnatural look," warned the analyst.
Besides the S&P 500, this 'unnatural look' is seen on a number of indexes, including the S&P 400 Midcap Index, DJ Composite 65 Index, and DJ Transportation Average.
The phenomena is also seen on individual stocks like Brunswick Corporation (NYSE: BC), Celgene Corporation (Nasdaq: CELG), State Street Corporation (NYSE: STT), Cree, Inc. (Nasdaq: CREE), and Netflix, Inc. (Nasdaq: NFLX). Once viewed as opportunities, Worth now thinks potential in these stocks has been tapped.
One stock noted by worth as not yet having been exploited is Genuine Parts Company (NYSE: GPC). Of course, the real prize is Apple.
"At this point, with AAPL having almost closed its January 25th 2012 gap of exactly a year ago, we think risk/reward is favorable on an outright basis AND relative to equities in general," concluded the analyst.
He thinks shares of Apple will reverse and head back toward $525.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Genuine Parts (GPC) PT Raised to $180 at CFRA
- Chevron (CVX) PT Raised to $204 at Piper Sandler
- Itau BBA Reiterates Outperform Rating on WEG S.A. (WEGE3:BZ) (WEGZY)
Create E-mail Alert Related Categories
Analyst Comments, ETFs, TechnicalsRelated Entities
Standard & Poor'sSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
