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Top 5 Reasons Apple Could Be Cracking

It seems all anyone can talk about on Wall Street is the price action in Apple, and whether the stock is starting to crack.

Apple hit an all-time high of $644 back on April 10th but since then the stock has done nothing but decline.

Is Apple starting to crack?

The Fast Money team has done some research and found 5 causes for concern:

1. Weaker Mac Sales
Late data suggests Apple could miss Street estimates for sales of its Mac computers in the just-ended fiscal Q2.

2. iPad Sales May Disappoint
Brian Blair of Wedge Partners warned that “iPad sales may not be as strong as the Street expects."

3. Profit Margins Peaking
BTIG’s Walter Piecyk told us on Fast Money that he doubts wireless carriers will keep offering giant iPhone subsidies. In turn, that should hurtprofit margins.

4. Over-owned
BGC analyst Colin Gillis thinks the stock is overowned. “Apple is the most widely owned stock among hedge funds – if sales results for iPhones and iPads start to disappoint you’re going to see hedge funds liquidate,” he says.

5. Chart Breakdown
Apple broke below 20-dma on Friday for first time since December 19, 2011.

Although the Fast Money traders concede that everything mentioned above presents headwinds, they do not think the stock is seriously challenged.

Tim Seymour agrees that the technical action isn't great but thinks the 50-day around $558 will hold. “That’s the level, where I’d buy,” he says.

Trader Guy Adami also thinks Apple is a buy.

“Yes, it broke though the 20-day – but that doesn't make it a broken stock yet. The stock action doesn’t indicate that,” he says. “Frankly, I think this is the opportunity every Apple bull has been waiting for."

Pete Najarian is also bullish and he put his money where his mouth is, today. “I pulled the trigger at $589,” he reveals. “Apple has paused before. It makes sense that there would be some kind of pause again.”

And in a live interview, Brian Marshall of ISI told us the pullback was purely mechanical and he also considered the pullback a buying opportunity.

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Trader disclosure: On Apr 16, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Pete Najarian AAPL ; Pete Najarian BAC CALLS; Pete Najarian C; Pete Najarian JPM CALLS; Pete Najarian MS; Pete Najarian INTC; Pete Najarian YHOO; Pete Najarian SBUX CALLS; Pete Najarian COP; Pete Najarian PEP; Pete Najarian HPQ; Pete Najarian HD CALLS; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM CALLS; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

For Colin Rusch
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For Scott Nations
Scott Nations is long BAC
Scott Nations is long C
Scott Nations is long SPY
Scott Nations is long TIVO CALLS

For Amelia Bourdeau
Nothing to Disclose

For Brian Marshall
Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in the Report. No person(s) responsible for preparing this Report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. No person(s) preparing this report or a member of his/her household have a financial interest in the subject companies of this Report. At various times, the employees and owners of ISI, other than those preparing this Report, may transact in the securities discussed in this Report. Neither ISI nor its affiliates have any investment banking or market making operations. No person(s) preparing this research Report has received non-investment banking compensation from the subject company in the past 12 months. ISI does and seeks to do business with companies covered in this research Report and has received non-investment banking compensation in the past 12 months: AAPL with wires.

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