Apple stock (AAPL) is playing with technical firs as the stock heads into the last trading session of the week.
Shares of the iPhone manufacturer have been losing ground from their new highs as investors and analysts speculate that the company may disappoint on its next earnings report.
Apple is scheduled to release its current quarter’s earnings results on January 30 after the market close.
Last week, analysts at Moffett Nathanson downgraded the stock. The downgrade came following more than a week of headlines that pointed to weakness for iPhone sales.
Now, with shares trading 8% lower, Apple stock is threatening to break below it’s 50-day moving average.
A break below the 50-day would cast a negative light on the stock from analysts and investors. The 50-day moving average is considered one of the most important trendlines in technical analysis. A move below the 50-day would create negative sentiment towards the stock ahead of the earnings call.
In addition, Apple’s price is currently sitting above the stock’s bottom Bollinger Band.
Bollinger Bands are a tool to measure a stock’s current and potential volatility. A break above or below a stock’s Bollinger Bands usually generates a rally or selloff.
For example, on November 25, Apple shares moved above their top Bollinger Band. That “break” resulted in a fast and aggressive rally of 11% over the following month. That bullish break also happened after the stock crossed above its 50-day moving average.
Today, the stock is looking at the exact reverse situation.
A move below $240 will put the stock below its 50-day moving average and break below Apple’s bottom Bollinger Band. The technical combination would set a selloff in motion that would target a likely drop to $220.
Apple stock remains in a long-term bull market trend, but investors would be wise to pay attention to the stock’s short-term trend reversal.
