Shares of Apple Inc. (NASDAQ:AAPL) are higher by 11.40% for the year-to-date with three trading days left in 2016. AAPL stock has been underperforming the technology sector — as represented by the Technology SPDR (ETF) (NYSEARCA:XLK), which is up 17% for the year. However, Apple’s absolute and relative charts are increasingly looking more promising through the lens of multiple time frames as we head into 2017.
When I last discussed Apple stock in this column on Nov. 18, I focused on the latest bullish reversal that had taken place just a few days prior. I also said AAPL could look promising into year’s end with an initial price target range around $115-$120.
The stock is now trading right in the middle of my near-term target range and thus has satisfied my price target. But after a second look, I think there’s even more upside to be had.
As a side note, the next big planned catalyst for AAPL stock is its Jan. 24 (estimated) earnings announcement, which could make or break its charts.
AAPL Stock Charts
Before looking at Apple’s absolute charts, I’d like to point out the comparative chart below. Through a two-year lens, AAPL is continuing to show better relative strength versus the XLK.
A simple diagonal resistance line drawn from the relative strength peak in the summer 2015 shows clear relative strength improvement since the second half of summer 2016. The higher lows since then are pushing the stock into diagonal resistance, and a breakout past this line looks increasingly likely through a multimonth lens.
It’s also important to note that AAPL stock makes up about 14% of the XLK’s weight.
On the multiyear weekly chart, we see that Apple stock continued to hold its red 200-week simple moving average all along, even when it pulled back into its May 2016 reaction lows.
From this angle, we also can look at the 12-month corrective phase from May 2015 into May 2016 as a bull flag pattern, which I marked with the purple-dotted parallels.
If a breakout of this bull flag is to continue in 2017, a logical next upside target over the next few months would be the May 2015 highs, so around the low $130s.
Finally, on the daily chart, we see that AAPL stock bounced off its red 200-day SMA again in the first half of November. The 200-day moving average has been a simple but good line of reference for traders to focus on.
Since breaking back above this line in late July, Apple stock bounced off the line twice. If history is any guidance, this fact alone through a technical lens could lead to higher prices in coming months.
Over the past few days, AAPL has consolidated below horizontal resistance. While it is possible that stocks see some gyrations in January, my proprietary B2 Reversal Indicator flashed a near-term buy signal yesterday (Dec. 27), which would be confirmed upon a push above $118 on a daily closing basis.
If AAPL stock can push and hold above there, then a next upside target around $123 could open up.
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