Is This Why Apple May Be in Long-Term Trouble?

Apple’s (NASDAQ:AAPL) stock may be in correction zone, but the company is likely to see more losses in the long term, according to Janney Montgomery analyst Dan Wantrobski. That is because over the last two months, Apple has developed a head-and-shoulders pattern, a system where a stock hits three peaks and often foretells turning points.

“While this most recent slide in Apple has pushed the stock into oversold territory, we believe the longer-term charts argue for even further potential downside,” Wantrobski said, according to The Wall Street Journal, adding that the key pointers were the 30-week moving average in the low $600s as well as an uptrend line from 2010 in the mid-$500s.

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Wantrobski added that the selling trend was being seen by several consumer stocks. “Yesterday’s action was a continuance (and confirmation) of a theme we have been watching for several sessions now: sector rotation within many of the high-flying consumer names into groups that have been out of the spotlight for most of the year,” he said.

Other stocks that saw a similar chart include Dollar Tree (NASDAQ:DLTR), Foot Locker (NYSE:FL), Limited Brands (NYSE:LTD), and TJX (NYSE:TJX).

“Regardless what will happen in the weeks/months ahead,” Wantrobski said, “the trends we are seeing on the relative strength charts suggest that investors should consider moving away from an overweight in many of the popular consumer names and look for opportunities in sectors which have lagged behind for most of the year (if not longer).”

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