Apple Stock Is Compelling for Serious Investors

  • Apple (AAPL) is out of favor on Wall Street.
  • The drag from indices is hampering its recovery.
  • AAPL stock remains the stock to buy after corrections.
Close-up of Apple (AAPL) retail store Logo in Honolulu at the Ala Moana Center. Advertising the latest generation of the ipad, iphones, and ipods with a Retina display.
Source: Eric Broder Van Dyke / Shutterstock.com

Apple (NASDAQ:AAPL) arguably has the best stock on the planet, and perception matters a great deal. Wall Street investors are on their back foot as the bears have come out of hibernation. The negative headlines have created an uproar that has eroded confidence to an extreme degree. Even the experts are reacting to headlines, while they should be driving the action.

We have a lack of leadership, but if it comes back it will show up in AAPL stock first. That is why it is important to ascertain where support lies for this leader of the pack. It is imperative that the bulls step up this week before it becomes too late. Monday started off the week on a very bearish note. The S&P 500 fell more than 3% and the Nasdaq even worse.

On a good note, we just about closed the gaps the bulls left behind April of 2021. Gaps are not magical but they become magnets when prices come close enough. Aside from the technicals, Apple has impeccable financials. Its metrics are pristine, even if not dirt cheap. There is hardly anything cheap these days, but we can only use relative terms. Otherwise, we’d have to hang up trying to invest until a full on crash.

Ticker Company Current Price
AAPL Apple $156.33

Years of Outstanding Performance Makes AAPL Stock a Buy

Apple (AAPL) Stock Chart Showing Important Support
Source: Charts by TradingView

Despite the company’s operation and financial success, Apple stock has corrected 15% since April. This makes it three such occasions in six months. These are rare occurrences due to the current unusual environment. The world is suffering through a global geopolitical crisis in Ukraine. The allies are just now implementing threats of boycotts and mostly financial consequences. Wall Street hates uncertainty and we have a slew of it coming from the Russian conflict.

Moreover, the central banks have waged their own war against inflation. This wound was from self harm, since they willingly flooded the system with cash. They caused this problem on purpose and now they are panicking facing their outcomes. The political pressure is too intense, so in the U.S. the Federal Reserve caved and has gone full bear.

It also appears that they will ignore bad economic reports. We’ve already seen a rare negative GDP in April, I bet they can’t ignore too many of those. I can’t wait to see how they will manage to walk this gauntlet between inflation and economic growth. There are potentially grave consequences from their actions, but I refrain from rendering a verdict just yet.

Investors Should Stick to What Has Worked

Even though I have my overall reservations, if there is a company that stands the chance at stabilization it’s Apple. There is hope at the end of this AAPL stock tunnel. First, the indices may be approaching defend-able support levels. If so, then the drag they are causing would abate. As exchange-traded fund’s fall into prior pivot points from about a year ago, they should find buyers lurking. If so, then there is no reason why AAPL doesn’t do the same. In fact, since it is a premier company, it may even play a leadership role.

Serious investors can start nibbling into AAPL stock near $145 per share. If it’s good enough to be half of Buffet’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) portfolio, then I can risk a couple of bucks on it too. The stabilization effort requires courage, so seeing it happen in Apple could be infectious. Until then, investors should remain leery of rallies and keep position sizes small.

The bears have succeeded in killing rallies and reverting to making lower-lows. That’s how the markets sets bull traps, one fake breakout at a time. The best bottoms happen in a process, not a flash point in time. This means we should see a trough first, then a series of higher-lows.

On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Nicolas Chahine is the managing director of SellSpreads.com.


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