Here's why I'm shorting Apple stock and the entire Nasdaq: veteran trader

Yahoo Finance's Jared Blikre is joined by JC Parets, Founder & Chief Strategist at allstarcharts.com in today's 'Getting Technical'.

Video transcript

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ZACK GUZMAN: Welcome back. More jitters playing out in the markets today. So it's time to get technical with Yahoo Finance Jared Blikre right here to break down all the key levels along with a special guest day. Jared, toss it to you.

JARED BLIKRE: That's right. And thanks for that opening intro graphic. Not sure who that was. Maybe it's that guy up there.

But I want to bring in JC Parets here, founder of All Star Charts. And we're going to talk about the NASDAQ. In fact, we were supposed to talk about this last Friday. We got preempted by Janet Yellen. And guess what, we're down considerably from there. And to your credit, JC, you've been somewhat cautious about the tech sector for at least a month that I've been following.

JC PARETS: Yeah, I mean much more than that. Really, I mean, the underperformance started Labor Day last year, right? At the end of the summer, that's when they all peaked. Amazon's done nothing since then. It's not just tech. It's really big growth and even small cap growth. Growth in general peaked at the end of last summer. Apple, Amazon, all of them, on a relative basis, underperformers across the board.

The big winners have been coming out of value, which you and I have discussed, right, financials, Berkshire Hathaway, energy. Remember when we talked about those right here on the show. Those have been the winners. The losers have been the growth stocks.

There's so much evidence that 2021 is just not what 2020 was, right? It's just a completely different type of market. And some investors are able to adjust and see the information coming in and act accordingly. And some investors just like to sit on their hands and hope that last year's market was going to continue to be this year's market. I see it every day. And they're paying the price for it.

JARED BLIKRE: So your interest in the value and cyclical sectors, I get that. What else are you looking at? Because I've seen a few interesting things pop up on your radar recently.

JC PARETS: Yeah. Well, we've mostly been interested in being short, particularly the NASDAQ because if you're going to be short, you want to be short the weakest areas, right? So small caps, NASDAQ, the level's February highs. Those are the levels.

So if you're below the February and in caps or NASDAQ, under no circumstances can we be long. I wish we would have had this conversation on Friday like we were supposed to. But hey, that's why, I guess, you go to our site or whatever so you can see what we're talking about.

The bottom line is there's no reason to be long if the NASDAQ or small caps are below those February highs. Quite the opposite. Everything had been hitting our upside objectives, including a lot of these value areas, including the S&P 500, including the S&P industrial sector. So all these sectors hitting our upside objectives, and then the defensive areas catching a bid.

First thing that assets need to do before they can start going up is to stop going down. And over the last year, what were the worst assets? Bonds, yen, gold, staples on a relative basis, all of the defensive areas were the worst places to be.

And that changed in the first quarter of this year. They stopped going down. And over the last couple of months, they've actually been going up. We've been bullish gold. Trade has been working, not just the metal but the miners as well. Yen stopped going down. Bonds stopped going down. They're not really going up, but they're not going down either.

And in staples, utilities, REITs outperforming, does that remind you of an environment that stocks should be doing well? Or should they be doing poorly? And then when you see the breadth deterioration in the NASDAQ, there's your short entry.

So we got the short entry last Monday. And it's working well. So I think the Q's go down to 275. That's what we're going to be covering our shorts, 275.

JARED BLIKRE: 275, I'm marking it on the chart right here. You mentioned gold briefly. We were talking about Apple. I want to get to that because the biggest public stock in the world, maybe the universe. And it's an important sentiment indicator. But what are you looking at in the technicals in Apple?

JC PARETS: Yeah, it's also a short. I think you short the whole thing. I mean, you keep shorting it, right? It's not anything new. They haven't been working. There's no evidence they're going to start working any time soon.

I'm hearing that Kathy Wood consider Apple her cash equivalent. That's pretty scary, if you ask me. So I really like the short a lot. Notice how those September highs-- where we got to September was 138. We tried to get back there in January and failed. Most recently tried to get back there last month, failed again. That's the level, 138.

If you're below 138, under no circumstances can you own Apple, number one. Number two, I prefer to be short. And how low can it go? I mean, I don't know, it could go real low. Why can't it get back towards 100? I think there could be a lot of downside potentially. I have no idea.

But I do know that we don't want to own it. And if I had to pick a trade, I'd much rather be short. But again, only if we're below $138 can you be short Apple. And we only want to be short the NASDAQ if we are below the February highs, right, 338, if I'm not mistaken, 338, yeah.

JARED BLIKRE: Got it. Marked it right there. JC Perets, founder of All Star Charts, thank you for joining us. Sending it back to you, Akiko.