After soaring 380% between New Year’s Eve 2009 and its all-time high last April, Apple Inc. (AAPL) took a breather. It plunged to a multiyear low of $92 in the August flash crash and continued to trade at relatively depressed levels through the end of the year.
Investors were spooked, but I called out the weakness as a buying opportunity.
Apple stock has yet to make a run back up to new highs, but my outlook here remains the same. Let me tell you why.
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Taking a look at the chart, you can see that the 50-day moving average (the yellow line) hasn’t been the best indicator for Apple stock, as it has traded both above and below the MA several times over the past year.
That said, AAPL did blast through the indicator on March 1 on one of the heaviest-volume days the shares had seen in the last month. That’s a positive sign, but even more important was the rally that followed through $101.50, which was the high from late January. After climbing as high as $103.75, Apple stock pulled back to successfully test the old resistance level at $101.50, convert it into support and restart its leg higher.
But let’s shift our focus to the 200-day MA (the blue line), which has been a more accurate identifier of support and resistance levels. The 200-day, currently sitting around $112, is the next target level for AAPL, especially now that it’s trading at the best levels since the first week of January. However, given that the indicator is moving lower and there is price resistance at $108, the stock will likely face headwinds as it nears $110.
But with the way the chart looks right now, the undervalued fundamentals suggest that Apple stock could overcome them to retest its November high of $123.84.
What Else to Watch in Apple Stock
Outside of the chart action, there’s no denying that AAPL moves on headlines.
The biggest news item recently has to do with the FBI and privacy laws, but I don’t see the company’s battle with the U.S. government having either a positive or negative affect on the stock’s future outlook.
The last meaningful launch by the company was the iPhone 6 back in September 2014. Sure, Apple has released other products and product updates since then — the iPhone 6s and 6s Plus, for instance, and a rumored upcoming iPhone 5se — but the company has not offered any product-specific news that has acted as a major catalyst to push the shares higher. And for the stock to make a major move, it needs major news.
Still, I have no doubts in AAPL’s ability to launch a new and innovative product in the near future.
My only concern here is that in the current rally, volume hasn’t been consistently above average. Therefore I’m looking for that volume to pick up, especially when the stock attempts to break through its resistance and 200-day moving average.
All of this added up tells me one thing: Apple stock is most certainly a buying opportunity at current levels. And once it smashes through its ceiling, I suspect we’ll see new highs in the future.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks, the ETF Bulletin and Co-Editor of Breakout Stocks.
