One of the largest publicly traded companies on Wall Street could be setting up for an even bigger fall.
Apple shares, down 9% this month, could be a no-touch right now, according to Boris Schlossberg, managing director of FX strategy at BK Asset Management. The company has lost $114.7 billion in market value in March.
"The market is utterly underestimating how much of a shock the coronavirus is going to be to the economy. And I think for the next 12 months, the U.S. consumer is only going to spend his money or her money on [nondiscretionary] goods. So, within that basket, I think you have to let Apple go," Schlossberg said on CNBC's "Trading Nation" on Friday. "Anything that is discretionary I think will be absolutely not spent a penny on for at least a year."
Schlossberg adds that Procter & Gamble or Johnson & Johnson would be a better bet than Apple. Likewise, he would invest in PepsiCo over Disney.
Craig Johnson, chief market technician at Piper Sandler, disagrees. He predicts consumer spending to spring higher, driven by pent-up demand, once the worst of the outbreak passes.
"Right now [is] obviously a very difficult time in the country with the pandemic," Johnson said during the same segment. "From a tactical perspective, I think people are going to want to get out. And I think a lot of these cruise lines and airlines and these other players are going to really start to cut price, drive traffic, we're incentivizing some additional payment checks coming in for people that are going to be laid off. And I think you're going to see a bigger rebound here in 2020 than I think a lot of people think."
On Apple, Johnson said the technical and fundamental setup looks ripe for a bounce.
"If you take a look at the chart of Apple, this has pulled right back to identifiable support," he said, identifying the $225 to $230 range as a floor. He predicts Apple could then work its way back to its record high of $327.85, implying 32% upside from Friday's close of $247.74
"People are still going to step up and they're going to buy the iPhone. You know, when this gets relaunched and gets released for the 5G iPhone, they're going step up and buy it. We saw the iPhone get released in 2007 and 2008 in the middle of the crisis there. Consumers still were able to open their wallet and buy these things," said Johnson.
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Source: cnbc.com
