China Mobile News May be an Apple Selling opportunity

News that Apple, Inc. is in discussions with China Mobile will give the stock a massive move up, recovering some of its lost ground. Traders and even long-term investors should consider using this as an opportunity to take profits.

Apple has made a fortune for long term holders and many of a short term trader as of late.  But, going forward, trading this stock is not going to be for the feint of heart.  With increased volatlity over the last several sessions, today's session seems about as volatile as it gets.  It is now back at $170 and due to the fact that it has oversold stochastics, it may work its way back to $190.

You can wait and see if we retest $190, but I recommend selling right here.

Here  is why:

1) As the China bubble deflates, so too will the China news bubble.  Just being associated with China isn't going to work anymore.  As such, more and more people will understand that Apple will have very limited success in selling a $400 + iPhone product in China.

2) Apple has never been successful in any market other than the US.  China is a tricky one, and their success there, even with a China Mobile partnership is likely to be limited.

3) This IPhone / IPod headset thing is going to get serious.  See the report that Sanjay Gupta did on it on CNN if you can find it.

4) The trend to the NASDAQ is down.  We are just entering a bear market and it will be long and difficult.  This is the time when bulls take their profits and those who are too greedy get ready to get slaughtered.

All this having been said, Apple is still a great long term play with fantastic fundamentals.  Do not short it and do not bet against Steve Jobs.  If you are a long term investor, you may even want to stay put. 

The stock to short is RIMM.  Its valuation is much higher, and ultimately Apple and Nokia will eat them for lunch.

 

 

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Comments

  • ChristySchien

    November 14, 2007

    You are wrong. China Mobile is 3.5 times the size of ATT and China is booming. While it is still a rumor, if a deal is consummated, it is HUGE for Apple. While you are correct that Apple has never been strong outside the US, that is why the company is still a buy even at these prices (even without a China Mobile deal) - it still has huge growth opportunities in Europe and Japan.

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