Apple Inc. (NASDAQ:AAPL) has been one of the primary drivers of the market’s impressive post-Brexit surge. From the low on June 27, AAPL stock climbed more than 20% into its Aug. 16 high. That yanked the Nasdaq Composite higher along with it on account of its huge market capitalization.
Since then, Apple shares have wilted after hitting resistance form the mid-April high near $111-a-share. On Thursday, AAPL stock pushed below its 20-day moving average for the first time in four months.
AAPL shares are looking vulnerable here on a technical basis. The stochastic indicator is about to flash a sell signal for the first time since early June, positive volume is falling away and month-long support near $108 has been lost.
Fundamentals look troublesome, too, as all eyes turn to the upcoming iPhone 7 announcement on Sept. 7.
It’s well-known that AAPL is making only incremental changes to the iPhone 6/6s form factor, dubbing it iPhone 7. Instead, it will be holding off on more meaningful changes until the 2017 iPhone.
Moreover, even Apple co-founder Steve Wozniak says the oft-reported rumor that the iPhone 7 won’t have a headphone jack — forcing users to buy new Bluetooth or Lightening-compatible headphones — in exchange for possibly a bigger battery, a second speaker, or a quicker internal charger will only frustrate users.
Making matters worse are new reports on Friday by Nikkei that the iPhone 7 could face supply issues at launch due to low component yields on its waterproof speaker and dual camera system.
As a reminder, AAPL recently suffered its first ever year-over-year decline in sales of iPhones, by far the company’s most important product. The smartphone market is becoming saturated and consumers are losing interest amid a clear innovation slowdown.
So far, iPhone 7 doesn’t look like enough of a change to reverse this trend.
Thus, AAPL stock looks likely to revisit recent lows. A move down to the 200-day and 50-day moving averages near $102 look likely. That would be worth a 5% decline from here.