Shares of Apple Inc. Concern Investors

The largest company, Apple (AAPL: Nasdaq) on the S&P 500 gave investors a reason to be concerned as shares  on charting systems formed a death cross. This is a sell indicator to chartists and technical analysis.

Over the past week, markets have sold off sharply and Apple has not been spared. Shares of the technology giant are off by 20 percent from their record high of $123.54 set on April 28, 2015. Investors are taking money away and technical analysts are watching the recent breach of the short-term moving average now breaking through the long term trend line higher. This is called a death cross.

The biggest reason for concern is the size of the company which has a huge $592 billion market cap which makes it the largest in the S&P 500 Index. There can be no bull market without Apple supporting it. The company has been the biggest driving force of the Nasdaq and the tech sector and has the biggest weighting on the S&P 500. The main issue for the company is China which accounted for 25 percent of the iPhone sales last quarter.

iPhone is the driving force behind Apple’s revenue as it accounts for 66 percent of the company’s sales. The figure jumps to around 85 percent of the net operating profit.

This death cross has only happened once in the past five years in 2012 when the shares shed 27 percent after showing this chart formation. There are mixed signals with AAPL. The stock is oversold near the $100 support but there is a lot of resistance back up as it breaks key support levels on the way down.

Investors would need to see the stock stabilize before really jumping in with strong buys at this point. It is also important to consider that the company essentially has one product. As mentioned above, it is the iPhone which drives revenues and profits. Maybe one should be concerned about whether or not AAPL should be a staple in one’s portfolio at this time.