We believe the time has come to sell Apple stock.

There are a few important criteria factoring into our sell recommendation:

I will detail our observations for you here.

Growth

We see declining year-over-year earnings growth from Apple. This year we are expecting earnings growth of only 2.31%. Although the multiple on Apple AAPL, -3.17% does not look excessive at just over 10 times earnings, the “PEG” ratio for Apple is about five by our estimation for calendar 2016.

That means that earnings growth this year is expected to be meager and relative valuation will look rich throughout the year, especially over the next two quarters. That presents headwinds. Investors who are looking for relative valuation will not find value in shares of Apple given what we consider its meager 2016 growth rate.

Valuation

We also think that investors will look for relative value as we believe the macroeconomic environment in the United States will deteriorate. We consider the U.S. economy to be in a liquidity crisis in terms of new money, and the end of stimulus opens the door to a reversion back to natural growth rates as those are defined by our proprietary macroeconomic work called The Investment Rate. The chart below demonstrates the differential between where demand levels have been and where natural-demand levels as those are defined by The Investment Rate exist today.

The macroeconomic environment

Given this macroeconomic observation, a 66% retracement in the demand for assets in the United States is likely, in our opinion. Institutional-investor liquidity has also dried up as they have extended their margin-debt levels, and the cash-to-margin-debt ratio on the New York Stock Exchange remains at an all-time low. That means that institutional investors are no longer able to prop up the market like they did in 2015, when they incurred the majority of this additional margin debt.

We believe they incurred this debt in anticipation of the market ending the year on a positive note given the historically solid performance of the market during the third-year of a second presidential term. But the failure of the market to perform last year left institutional investors holding high levels of margin debt, and eventually they will be selling into the market.

Therefore, not only does our macroeconomic model suggest that demand for assets fall back into parity with The Investment Rate, but institutional investors are not able to prop up the market with added margin debt, but instead more likely to add supply and selling pressure, compounding the downside risks that already exist on a naturalized basis.

Apple fits the bill

With this understood, economic conditions do not necessarily need to change, although they probably will, but multiple contractions are almost assured. If multiple contractions come, as we believe they will, investors will seek out value-oriented stocks, and shy away from stocks that lack value or that have demonstrated deteriorating earnings growth, and we think Apple fits that bill.

Apple has deteriorating earnings growth and stretched valuation levels.

In addition, from a more practical standpoint, we believe that the iPhone is becoming less innovative and global saturation is being realized. Consumers are also very fickle, and if someone “produces a better light bulb,” iPhone sales could actually fall because the product is no longer as innovative as it once was. This poses additional risks over and above the valuation and macroeconomic risks that prompt our sell recommendations.

Our price target is in the low $80s, roughly 20% below current market levels.