Investors are closely monitoring Apple Inc.’s (AAPL) stock performance as it continues its downward trend, dipping below the crucial $170 mark in Wednesday’s trading. With concerns over the iPhone maker’s shares hitting new lows, speculation arises about whether the decline is nearing a bottom.
Recent Performance: A Cause for Concern
On Wednesday, Apple stock recorded a 0.3% decrease, in stark contrast to the 0.8% gains witnessed by the S&P 500 and Nasdaq Composite. If this downward trajectory persists, it would mark the sixth consecutive day of losses, resulting in a cumulative decline of 7.3% over this period. Year-to-date, Apple shares are down 12%, trailing the Nasdaq by approximately 18 percentage points.
Technical Analysis and Support Levels
According to Fairlead Strategies founder and market technician Katie Stockton, Apple has broken down below the support levels of $179 to $180, indicating a bearish short-term development. The $170 level now becomes a critical threshold, as breaching it could lead to a more prolonged setback for the stock. Stockton identifies secondary support at approximately $161.
Frank Cappelleri, founder of CappThesis, and John Roque, senior managing director at 22V Research, also echo concerns about further declines. Both identify support levels around $165, and Roque warns that a breach of this level could see Apple stock dropping to $130, levels not seen since 2021.
Analysts’ Outlook and Contrarian Views
Despite the current downturn, Wall Street analysts maintain an average price target for Apple shares at about $200, reflecting an 18% potential upside from recent levels. Jefferies’ William Beavington notes that Apple is currently the most oversold it has been relative to the QQQ exchange-traded fund since 2018. He suggests that the intense negativity might eventually lead to a rebound.
Market Sentiment and Oversold Conditions
Apple’s recent struggles have not gone unnoticed, with analysts describing the stock as the most oversold in years. The company has faced challenges in 2024, including concerns about iPhone sales in China and a fine from the European Union. The stock has fallen 14% from a recent peak, erasing over $200 billion in market capitalization.
Michael Toomey, head of TMT trading at Jefferies, points out that the negativity surrounding Apple seems excessive. Jefferies’ analysis of the relative strength index indicates that Apple is the most oversold it has been compared to the QQQ ETF since early 2018.
Options Market and Future Outlook
Despite the recent selloff, options traders appear relatively optimistic, showing few signs of fear. Implied volatility for three-month options has increased from recent lows but remains within the middle range for the past year. The put skew, measuring the premium for protection against a decline, is holding near a two-year low, reflecting broader optimism about major technology stocks.
In conclusion, although Apple is facing significant technical hurdles and challenges, oversold conditions and contrarian views suggest its potential for a rebound. It is advised for investors to closely monitor market sentiment and key support levels in the coming days.
Apple Short (Sell)
Enter At: 166.73
T.P_1: 163.41
T.P_2: 157.89
T.P_3: 153.06
T.P_4: 145.81
T.P_5: 136.85
T.P_6: 130
T.P_7: 124.24
T.P_8: 116.38
T.P_9: 106.85
S.L: 196.86
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