SELL Apple

03/12/2013 7:45 am EST


Jack Adamo

Editor, Jack Adamo's Insiders Plus

Although he previously liked Apple, even if it turned into a slow grower like Microsoft, Jack Adamo of Insiders Plus has now made a 180% turn on his preference.

Despite the obvious attraction of Apple (AAPL) as a value buy, I'm doing a quick, tactical turnabout on it. I'm mostly positive on the company, the one exception being that I question its decision to release a cheaper version of the iPhone. I think it damages Apple's panache factor.

But that's not why I'm selling. As we can see by the market's big rally in the face of terrible earnings and weak GDP all last year, the market doesn't care what I think. It is going to do what it wants, and all my analysis means nothing, at least in the short-to-intermediate term.

So it is all the more troubling that Apple continues to fall on high volume as the market rises. The money coming out of the stock is relentless, and more than we can fight, I fear. We have not seen flows this negative since late 2008, but that was at the end of a horrific bear market plunge. The current capital exodus is occurring as the Dow hit a new nominal all-time high. That's not a good sign.

My guess is that this trend is not based on fundamentals, like the company's decision to sell a cheaper iPhone. It is probably just a lot of nervous money managers and individual investors who have huge gains they're afraid of losing, so they're taking profits.

Mark Leibovit, who runs the, a well-regarded short-term trading service, predicted Apple's recent plunge to the $450 area of support. He recently told me the next area of major support for the stock is $300. He did not say he saw any signs it would go there soon; he just said that's its next major support level.

In any case, with the stock's negative performance in an otherwise strong market, I'm not comfortable waiting to see how that plays out. With the exception of our gold holdings, we have two portfolios filled with stocks that are performing extremely well. Let's let them do the hard work, and wait for the decisions about Apple to get easier before making a stand. SELL Apple.

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