Steve Cortes: It’s Time to Short Apple
Contrarian trader Steve Cortes on Thursday said that he’s ready to jump back into Apple — by shorting it.
“I haven’t touched Apple in three months, but I think it’s time to get back in on the short side,” he said on “Fast Money.” “The main reason: When I look at charts, I look at Google from late 2007, in late November 2007, and overlay Apple, present tense, over that chart it looks incredibly similar.”
Google’s chart from that period showed a trend that Apple appeared to be following, in which the stock “seems like it’s unassailable, and then we see a parabolic move,” he said.
Cortes said he was looking for Apple to hit $600 — “I sold it at $595 and I do think that it’s time to come back to Earth.”
Apple shares hit $600.01 in the morning before pulling back. It closed at $585.56, down 0.7 percent.
Cortes clarified that he had no problem with Apple’s fundamentals or valuation.
“I do have tremendous qualms with the technical picture of Apple right now,” he said, adding, “I made a lot of money being short Apple in September and October.”
Apple bull Tony Sacconaghi of Sanford Bernstein agreed that Apple’s past periods of outperformance came within six-week spans.
“The rest of the time, there have been periods of flat and underperformance,” he said.
Sacconaghi said Apple was nothing like Google in the past, trading at a much lower multiple, showing strong cash flow and more than $100 per share on its balance sheet.
“I think short-term trades are always very difficult to call, but when I look at this stock I look at great end-market growth in terms of the smartphone market and in terms of the tablet market,” he said.
John Taylor, chairman and founder of currency hedge fund FX Concepts, saw potential in shorting Apple.
“It’s a really high beta stock,” he said. “The trade of shorting Apple is correct if the market’s going down. Apple will get crushed.”
Pete Najarian of OptionMonster.com noted various reasons why Apple showed continued strength, including China as a future “monster catalyst” and options activity showing “IPO-like frenzy” on a daily basis.
“What I don’t think anybody seems to understand is, this is not a comparable to Google,” he said.
Stephanie Link of TheStreet.com liked Apple’s outlook.
“I like this story. I think the most important thing is not only is there demand and there’s distribution, but the component availability is actually there, so they can actually make to demand, and that’s why numbers are going up,” she said.
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Trader disclosure: On March 15, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Kelly is long SMH; Kelly is long MXN; Kelly is short JPY; Kelly is short Aussie dollar; New Zealand dollar; Grasso is long ASTM; Grasso is long AVAV; Grasso is long BA; Grasso is long D; Grasso is long MHY; Grasso is long NUAN; Grasso is long MO; Grasso is long PFE; Grasso is long PRST; Grasso is long S; Grasso is long XLU; Link is long STI; Link is long JPM; Link is long USB; Link is long TJX; Cortes is long Treasuries; Cortes is long PPH; Cortes is long DEO; Cortes is long SO; Cortes is long SBUX; Cortes is short USD vs. JPY; Cortes is short AAPL
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