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Technicals Suggest Decline Imminent for Apple: Adami

Monday, 10 Sep 2012 | 5:14 PM ET

If you’re an Apple lover, chances are you can't wait to get your hands on the new iPhone5 out Wednesday. But if you’re an investor, should you be as excited to buy Apple's stock?

Historically Apple shares run into a product launch and then sell-off thereafter. And on Monday shares sure turned south.

Should you anticipate the pattern to repeat itself? Or is this launch different?

With the market trading so technically, trader Guy Adami, managing director of stockMONSTER.com, suggests looking at the price action. And the price action is negative - very negative.

"We had an outside reversal day, Adami explains. In other words, Monday's high was higher than Friday’s high but the stock closed significantly lower than Friday’s low of $675.

That's bearish.

"In fact we could see an outside reversal for the week," adds Adami. "Technically, the price action gives me pause."

Trader Joe Terranova, chief market strategist for Virtus, and Trader Tim Seymour, founder of EmergingMoney.com largely agree.

Beware Apple's Outside Reversal
Top trader Guy Adami says, "We had an outside reversal day in Apple. Technicals lead me to take pause."

As a shareholder, “I bought $655 puts,” Terranova reveals. That means he’s protected below $655. ”I’m still bullish but if you’re a trader I'd reduce some of your Apple position.”

"From what I can see Apple has put in a short term top – don’t forget we had a 7% move into this number," adds Seymour.

Bottom Line: All told, commentary from the traders suggests the historic pattern is likely to repeat itself.


Posted by CNBC's Lee Brodie

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Trader disclosure: On Sept. 10, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long ANR; Pete Najarian is long TCK/WLT; Pete Najarian is long BX; Pete Najarian is long BBBY; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long MSFT; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long CSTR; Joe Terranova is long SHKP; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long AAPL SEPT $655 PUTS; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami’s wife, Linda Snow, works at Merck (MCK).

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  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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