Apple Shares Aren't Looking So Buyable Headed Into iPhone 8 Launch

With the launch of what will most likely be called the iPhone 8 just days away -- slated for Tuesday, September 12th -- it seems rational to consider a purchase of Apple (AAPL) shares in front of what's expected to be the most popular iPhone ever.  After all, more sales means more revenue, which in turn means more profits.

That's an oversimplified assumption of the way the market really works though. Indeed, AAPL shares themselves have sometimes shown a distinct lack correlation  with the debut of some of its best-selling iPhones.  Sometimes a new smartphone's launch has coincided with a wave of bullishness, to be fair, but when you take a step back and look at the stock's history, you may find more reason to steer clear of or even short AAPL now rather than plowing into it.

Perhaps the stock's movement has little (or maybe nothing) to do with the headlines.

The long-term chart of AAPL shares below tells the tale. Going back to the 2011 release of the 4S -- when investors finally figured out that these unveilings had the potential to be tradeworthy -- there's been very little correlation between new phone launches and rallies. Yes, Apple stock rallied following the release of the iPhone 7 and the 5S/5C, but the stock tumbled following the launch of the iPhone 5 and the 6S.... each of which at the time was a record-breaking phone in its own right.

Calling a spade a spade, the ebb and flow of AAPL has had far less to do with new phone launches and far more to do with a long-term trading range that's been in place since 2011. It matters now simply because shares have already bumped into the upper boundary of that range and are struggling to move any higher. Considering the news at hand, the pause is concerning...

....concerning, though not necessarily surprising to trading veterans.

While the financial media and investors like to connect the if--> then dots when they make superficial sense and assume a stock's price always accurately reflects a company's results, that's not the case.  A stock's ebb and flow are far more random and far more technically driven than most investors are capable of acknowledging.

That doesn't make it not true though. Indeed, the term "buy the rumor, sell the news" became an all-too-meaningful cliche because things aren't always superficially rational when it comes to equities.

It's a cliche that hits a little too close to home for Apple right now as well, in the shadow of the 80% rally since July of last year, no less.

That's not to say AAPL can't blast past the upper edge of a long-term trading range that's proven to be a ceiling at least twice before; anything can and will eventually happen. It is to say, however, that many of the same bullish things that are being said of Apple now were being said of Apple in late 2015 and late 2012 as well. That optimism didn't pan out. There's no assurance it will this time either. In fact, the chart's technical history says a pullback is actually more likely here.