Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, January 3rd at 1:59pm ET.
The price of Apple is plunging today after issuing a sales warning for the first quarter. The stock was already in trouble before that announcement. The weekly bars in Chart 1 show Apple (AAPL) falling today to the lowest level since the middle of 2017. An analyst on CNBC today sounded confident that the stock would do better than the rest of the market "on a relative basis". So far, that's not working out very well. The red line in the upper box is a ratio of Apple divided by the S&P 500. That falling ratio looks more like relative weakness to me. The stock has lost -38% since the start of October which is twice as much as the SPX. The first quarter warning came from a drop in iPhone sales in China, which is just the latest sign that weakness in that economy is starting to take a bigger bite out of earnings here. The plunge in Apple is also taking a heavy toll on semiconductor stocks and technology which is the day's weakest sector. With other trade sensitive stocks under pressure, U.S. stock indexes are having a very bad day. From a charting perspective, today's selling is coming at a bad time.
Chart 1
