April 2022. You remember April 2022, right?
It was the first real taste of the bear market as stocks peaked in February. Then, things got ugly as important technical trendlines were broken left and right. Stocks and major indices accelerated lower with each technical trendline break.
Believe it or not, Apple (AAPL) shares are looking like they were trading in April 2022.
With a year-to-date loss of 6%, AAPL has investors asking “is this stock till magnificent?” From a technical perspective, they aren’t.
Two weeks ago, AAPL’s 50-day moving average shifted from a bullish to bearish trend. You know the old saying “the trend is your friend” - the 50-day moving average is the best way to quantify that saying.
Simply put, there is a 67% chance that each day’s trading will result in lower prices when Apple’s 50-day starts trending lower.
But there’s more. Apple shares have spent the last week or so battling with their 200-day moving average.
What’s the 200-day? It’s just a longer moving average, but it’s a little more important because this is one of the trendlines that you’ll hear them talk about on CNBC. That little difference means the world.
When a trendline is more widely watched, it tends to act even more as a “line in the sand.” If the stock crosses it, everyone takes note, and the market sells. That’s the situation that Apple is facing.
A break below the 200-day – let’s call it $155 – will complete the same pattern that Apple saw in April 2022. Bearishly trending 50-day and a break below the 200-day. This technical combination came ahead of a fast and aggressive 15% selloff in the shares.
A similar selling event now would land the shares around $155.
Bottom Line
There is more to Apple’s price forecast than just the technicals we’re talking about now. The company’s fundamentals have been slowly eroding as their product pipeline and AI Gameplan have been less than exciting.
I always tell people that technicals matter more than fundamentals, except on a company’s earnings day… Apple’s next earnings date isn’t until April 25. That’s a long wait for a stock that has some seriously jittery investors.
By submitting your email address, you will receive a free subscription to Money Morning and occasional special offers from us and our affiliates. You can unsubscribe at any time and we encourage you to read more about our Privacy Policy.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.