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This historical stat could show that Apple has more room to run

  • Strategist Boris Schlossberg says "the best days of Apple are behind it."
  • But another strategist, Max Wolff, says Apple may have significant room to grow in emerging markets and in augmented reality.

After a 27 percent year-to-date gain for the largest component in the S&P 500, has Apple peaked?

Boris Schlossberg, a macro strategist with BK Asset Management, certainly thinks so, saying that "the best days of Apple are behind it."

It's not that Apple cannot grow, but that its innovation has stalled — and the company has to come up with a fantastic new product to push the market share to new levels.

He's also taking a hard look at the stock's enormous market capitalization. It's now the top-weighted component in the S&P 500, at a bit less than 4 percent of the index. "It's not a good sign to be the biggest in the S&P," he said Wednesday on CNBC's "Trading Nation."

"It means you've pretty much reached your apex as far as growth potential."

However, the mammoth size of the stock may not be particularly worrisome for investors when considering the superior weighting of another tech behemoth a little over 30 years ago — that of IBM, which was 6.4 percent of the S&P 500 at the end of 1985. That was back when John Sculley was running Apple, Ronald Reagan was running the U.S. and Paul Volcker was running the Federal Reserve. And since then, shares of IBM have gained more than 300 percent — albeit while significantly lagging the index.

Shares of Apple initially slipped after the company on Tuesday reported quarterly revenue that fell short of estimates; it also reported selling fewer iPhones than expected. Its cash hoard grew more than $10 billion from the previous quarter to reach $256.8 billion.

If Apple wants to grow further, it should pour money into its research and development, particularly if the company gets a tax break with repatriation under the Trump administration, said Max Wolff, 55 Capital market strategist. He said Apple may have significant room to grow in emerging markets and in augmented reality.

"I'm not so sure Apple is done growing in terms of its market cap or in terms of its weight," Wolff said Wednesday on "Trading Nation."

Technology is the best-performing sector on the market this year. The four top-weighted names in the S&P 500 are Apple, Microsoft, Amazon and Facebook.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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