As the tech sector continues to struggle, TradingAnalysis.com founder Todd Gordon says it's time to bet against the biggest tech giant of them all.
By comparing a 60-minute candlestick chart of Apple against the Nasdaq 100-tracking ETF QQQ, Gordon points out that not only is Apple underperforming the QQQ while many tech stocks have rebounded, but a certain pattern suggests the stock will have trouble moving higher.
"We've fallen into quite a consolidation here right around the mid-$140 area," he said Thursday on CNBC's "Trading Nation." "Apple has been unable to recapture [its] June 9 high."
Since Apple is hovering in the mid-$140s, Gordon is betting that the stock can stay below $145. As a result, he is putting down a "call credit spread," which entails selling the July monthly 145-strike calls and buying the July monthly 150-strike calls expiring July 21. His credit for putting on the trade is about $1.60, which is $160 per options spread and is the maximum reward Gordon can receive if Apple closes below 145 on July 21.
If Apple closes above $146.60 on July 21 expiration, this trade will deliver a loss. And the maximum loss will come if it rises above $145.
Despite dropping more than 6 percent this month, Apple is still up 24 percent this year.
