Apple just entered a death cross, and Wall Street should 'prepare for the worst'

Apple shares are in the crosshairs.

After hitting records in October, the stock has slumped 33 percent in one of the worst performances on the Dow.

Its technical setup is pointing to more pain, says Bill Baruch, president of Blue Line Futures.

"Apple has gone lower than I thought it would," Baruch said on CNBC's "Trading Nation" on Thursday. "You're getting a death cross. It's one of the many different stocks out there that are seeing a death cross."

A death cross is formed when a stock's 50-day moving average crosses below its 200-day moving average. The bearish technical move implies the rapid deterioration of a stock's upward momentum.

"I think the downside could potentially be $144," he said. "You may not get there, but you have to plan for the worst."

A move to $144 would mark an 8 percent decline from current levels. Such a drop would push Apple down 15 percent for the year.

Stacey Gilbert, market strategist at Susquehanna, says market appetite could keep Apple under pressure for longer.

"What we have going on right now in the marketplace is what I'd call a buyers' strike, so it doesn't really matter if it's a name that's worth buying that you want in your portfolio for the next two years or a name that's still overvalued here. The buyers just aren't there," Gilbert said on "Trading Nation" on Thursday.

Even so, to the long-term investor, Apple's sell-off could present a discount opportunity.

"If I were looking to something like Apple, if you like the stock, if you like the valuation, I do think that this is a name that in your portfolio two years out, you're probably happy you own it," said Gilbert.


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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 CNBC and 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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