Shares of Apple (NASDAQ:AAPL), while still higher by about 20% for the year-to-date, as a result of the recent slide are now also 15% off their 2018 highs. Just because a stock is “off it’s highs,” however, does not make it a buy. But AAPL stock is nearing better technical support that could bode well for a year-end rally sooner rather than later.
As a side note and before we start looking at the below two charts, allow me to say I continue to see Apple as a good story on the long (buy) side. It is my view that the company may have seen peak iPhone growth, but that does not mean it cannot see good growth going forward from services as well as future hardware innovations. At the same time, liking AAPL stock from a longer-term bullish perspective does not mean one has to buy/chase it higher at any price.
AAPL Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the multiyear weekly chart, we see that AAPL stock over the past decade or so has found a well-defined upward sloping trading range … albeit a wide one at that. Earlier this year in April the stock began to accelerate higher and out of this range, thus forming/completing a steeper uptrending range. By August and just before the broader market as measured by the S&P 500 found its year-to-date top, AAPL stock even overshot this second steeper ascending channel. It was just a matter of time until a mean-reversion move would set in that gets the stock back into this steeper channel.
Through a multiyear lens I still think AAPL stock is overbought and I would prefer to buy more of it should it eventually move lower and back into the main upward moving channel. But I will give myself plenty of time and exercise patience to do this.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
Moving on to the daily chart, we see that as a result of the recent 15% pullback, AAPL stock has sliced below its 50- and 100-day simple moving averages — the yellow and blue lines respectively. The MACD momentum oscillator at the bottom of the chart is also oversold. While the stock could begin to bounce from here into year-end, personally I would like to see it test its red 200-day simple moving average with more vigor and then begin to bounce. Because that type of price action however is only my “wish,” we have to approach this a little differently.
I still see AAPL stock as a good candidate for a year-end bounce, so buying some stock or at-the-money call spreads using January options around the $200 mark makes sense. This to me, however, is more about building up a position, which is to say that I would look to buy more should the stock ultimately visit the 200-day moving average (or lower) around the $190 area. My upside target for now for Apple stock into year-end is around $220.
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