Reasons To Be Bearish On Apple Ahead Of Earnings

Ian Winer, Wedbush director of equity trading, was on CNBC Friday to discuss his outlook for Apple Inc.AAPL's stock going into its earnings. Here is what he had to say.

The Knowns And Unknowns

"When I look at the stock, I basically see that there is a known quantity, which is: it's a great story; it's cheap; they are buying back stock," Winer said. "And I think everybody knows that. The unknown quantity at this point is: what's this recent stuff in China going to mean for the iPhone sales there? —which is a key part of the story."

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He continued, "The other thing I think that's happening is, hedge funds are bringing up their gross exposure again, and I think the market usually hurts the most amount of people. So as you have everybody gross up again like they are today, when it comes back the next day, I think they are going to be looking to sell Apple as is the first thing that they can move to bring down long exposure."

Going To Get A Shock

Winer was asked if investors want to book profits in Apple should they do that before the company declares third-quarter earnings. He replied, "Well, I actually think you are going to get a shakeout going into the quarter. I think, there's a lot of people who are core longs, so to speak, and then as they get close to the earnings print they start to trim it down a little bit.

"So, I actually think people are going to be nervous about the guidance for the first time in a while, and so, I actually do think they are going to get a shock for a few points down and maybe they'll even break that 200-day into the print," Winer concluded.

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