Negative Reports Encourage Apple Inc. (AAPL) Bears

Apple Inc. (AAPL) bears may be happy to see a round of negative news reports

Dec 16, 2015 at 2:53 PM
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The latter half of 2015 hasn't been kind to Apple Inc. (NASDAQ:AAPL), with the shares giving back over 13% in the past six months to trade at $110.19. More recently, the stock gave in to resistance in the $120 area, and has underperformed the Nasdaq Composite (COMP) by roughly 5 percentage points in December. Not helping matters is a recent flurry of negative news.

For starters, Credit Suisse lowered its iPhone sales estimates for 2016 by 8 million units, while also cutting its full-year profit estimate by 4%. Similar downward revisions have come down the pike today at BofA-Merrill Lynch, Mohan, Robert Baird, and Raymond James.

Elsewhere, reports suggest that while the company is working on 3D Touch technology, it won't have the kinks ironed out by next year's iPhone and iPad launches. Finally, a number of customers are claiming the tech giant is using pop-up ads as a way to encourage them to upgrade their iPhones

In options land, AAPL put volume is running at an accelerated pace today. Longer term, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that put buying has actually been more popular than normal over the past 10 sessions. That's according to AAPL's 10-day put/call volume ratio of 0.58, which is higher than 69% of all readings from the past year. The stock's Schaeffer's put/call open interest ratio (SOIR) -- at 0.81 -- also stands higher than two-thirds of readings from the past year, suggesting short-term speculators are more put-skewed than normal. 

Pessimism has picked up outside the option pits, as well. Short interest on the equity surged by almost 53% during the most recent reporting period, and now represents more than three days' worth of buying power, at normal daily volumes. In fact, short interest on AAPL is now at its highest point since September 2014. 

However, while some analysts have recently lowered their expectations on Apple Inc. (NASDAQ:AAPL), most are still in the bulls' corner. Twenty-two of the 31 brokerage firms with coverage on the stock say it's a "buy" or better, with zero deeming it a "sell." 

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