Apple Inc. (NASDAQ:AAPL) continue to struggle this year as broader market pressure weighs on the vast majority of stocks.
Analysts and perma-bulls on AAPL stock reiterate daily how cheap the stock is at its current valuation, but entirely miss the point of gravity and naturally occurring corrective phases.
Since everyone and their mother is asking where it may make sense to buy Apple stock again (at least for a trade), here are the levels I’m circling.
First off, let’s note that when Apple reported its latest batch of earnings on Jan. 26, the stock reacted decidedly negative the following day, gapping lower and closing at the day’s lows. That’s not a reaction that inspires confidence in earnings, particularly after an already steep drop off the 2015 highs and considering that Apple stock has mostly traded sideways since.
A little visual observation on the charts can go a long way.
Keep it simple, folks, particularly in bear markets. In a bear market, we are never as dumb as we think, so let’s not overly complicate the trading/active investing approach.
AAPL Stock Weekly Chart
The following multi-year weekly chart should clear up the confusion and offer perspective for both the Apple bulls and bears.
On the chart, I drew two very simple, yet revealing lines. The bottom line connects the 2009 lows and the upper chart connects the major highs. I remind my direct clients and Clubhouse subscribers daily that trading and investing is all about time frames. On a long enough scale, most stocks and assets show ebbs and flows and mean-reversion moves.
Apple stock, after an ultra-sharp rally in the first half of 2012, finally exhausted itself, and within seven months it completed a major corrective/mean-reversion move back to the multi-year uptrend line. The next rally then lasted another few years and ended in 2015, right at the longer-term upper resistance line.
The mean-reversion move lower, that so far measures about 30%, looks to stand a good chance of ultimately revisiting the 2009 support line, which at present comes in around the low to mid-$80s.
AAPL Stock Daily Chart
In the daily chart, we see that ever since AAPL stock broke back below its yellow 21-day simple moving average in early December of last year it has respected it as a layer of resistance. A stock that cannot get back and hold above its 21-day moving average is in no position to stage a rally.
So keep it simple, respect the forces and trend in place. Until the Apple stock price can get back above this simple near-term moving average, which currently comes in around the $96.75 area, there is no reason to force into any tactical long positions.
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