Apple $AAPL is plunging after CEO Tim Cook warned investors that earnings and sales will be well below guidance in Q1. Apple Slashes December-Quarter Sales, Earnings Outlook (Investors.com) For its fiscal first quarter ended Dec. 29, the iPhone maker now expects revenue of about $84 billion. It previously predicted sales of $89 billion to $93 billion, or $91 billion at the midpoint. Apple now expects a gross profit margin of about 38%, compared with its earlier guidance of 38% to 38.5%. Apple said its operating expenses would be at the low end of its prior guidance range of $8.7 billion to $8.8 billion. It forecast "other income" of $550 million, vs. its earlier outlook of $300 million, given on Nov. 1. Here's a memo that Tim Cook sent to employees regarding the sales slowdown: Read Tim Cook’s Memo to Employees About iPhone Sales Slowdown (Bloomberg) Team, Happy New Year — I hope everyone was able to rest and enjoy time with loved ones over the holidays. This afternoon we issued a letter to Apple investors explaining that we are revising our financial guidance for the holiday quarter. I encourage you to read it. As you will see, our revenue shortfall in Q1 is from iPhone, primarily in Greater China. While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the U.S. and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do. We are tremendously proud of the innovations we’re delivering to our customers with iPhone XR, iPhone XS and iPhone XS Max. These are, without a doubt, the best iPhones we’ve ever made. We did not set a new record for iPhone sales in Q1, however, due to a number of factors — some macroeconomic, and some specific to Apple and the smartphone industry. External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple’s mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger. With that in mind, please join me for an all-hands meeting on Thursday morning at 9:30 a.m. PT. Be sure to check AppleWeb for more details. Due to construction at Apple Park, we’ll be gathering at Town Hall on the Infinite Loop campus. Join us there in person, or via live stream through AppleWeb. I’ll have more details about the quarter, and I’m looking forward to your thoughts and questions. Hope to see you there. - Tim Indeed, we have been waiting for further downside towards the 2017-low around $115. It started the 1/3 session falling almost 10% from around $156 to $142. Apple (APPL) - Be Prepared for a Pullback to 2017-Low ($115) AAPL Daily Chart (click to enlarge) Clear Break Below $150:- There was a support level around $150.- AAPL cracked it in December, but rebounded immediately so it wasn't a clear break.- This time around, the break is clear, and we are looking for the next support.Next Supports:- Below $150, the 200-week simple moving average (SMA) lies around $140. - I don't think this will provide support outside of the very short-term.- There is also a previous resistance pivot around $134.25 that might provide some short-term support to bounce back towards $150.- We will need to see a break back above $160 to show that the market has shrugged off the latest earnings warning AS WELL AS general market risk. - I don't think this will happen. Instead, I think after some choppiness immediately ahead, AAPL is going to continue lower to the next support.- I think that next support is around $115-$120, near a rising trendline and previous resistance pivot. - If the weekly RSI and price develops a bullish divergence by this time, there would also be a strong possibility of a rebound.- Finally, don't be surprised if AAPL stretches down to $100 during a protracted market downturn. - I think it would be prudent to prepare dry powder for AAPL at $100, although I will consider initiating some buying around $115-$120. AAPL Weekly Chart (click to enlarge)