Apple's recent weakness is just the 'pause that refreshes,' says one technical analyst

It's hard out there for an Apple investor.

The stock has been on a roller-coaster ride since unveiling its next generation products, as underwhelming reviews and weak demand for the iPhone 8 have sent shares tumbling.

"Apple looks very, very sick. It's rolling over and trading below its 50-day moving average," Larry McDonald, editor of The Bear Traps Report, said Thursday on CNBC's "Trading Nation." Apple on Thursday posted its worst day in more than two months, now down 5 percent from its Sept. 1 high. Meanwhile, the Dow and Nasdaq 100 have rallied a respective 5 and 1 percent from that date.

"It's really lagging here. … The risk-reward is poor," he added. "It's overdue for a drawdown, and that's what's coming."

Despite the recent weakness, the stock is still up 35 percent this year, and according to one highly regarded chart watcher, the technical setup remains intact.

"We haven't broken uptrend support," Piper Jaffray's Craig Johnson told "Trading Nation."

"Right now you don't know if this is a pause that refreshes, and let me just say that's exactly what we've been seeing with this entire market over the past 24 months, advances, sideways consolidations that refresh and then another move higher, and that's kind of what Apple's been doing."

Johnson pointed to technical symmetry from 2014 and 2015 as a gauge for how nervous Apple investors should be.

"The setup here looks very similar to what you've seen in 2014 and 2015 when the iPhone 6 launch came out. You saw a stock that consolidated sideways, broke its 50-day moving average, found support for a while right around the uptrend support line," he said. "But the big break didn't happen on the 50 day, the big break happened below your 200-day moving average in your uptrend support line."

Apple's 200-day moving average comes in around $146, about 8 percent below where the stock is trading.

"So we're a ways away from that actually starting to break at this point, and frankly I'd be surprised if that level did get broken," he added.

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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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