Today’s macro headline threats may suggest Apple (NASDAQ:AAPL) is cooked. But at Apple stock’s core on the price chart, shares simply look ripe for an opportunistic pullback that can be bought.
President Trump is back playing the role of “Tariff Man” on Twitter. In a surprise weekend move not linked to his a golf game, Trump tweeted that the U.S. is set to impose additional tariffs on Chinese goods or American manufactured products such as Apple’s iPhones or iPads. And that could be bad news for AAPL stock … or not.
In Monday’s early trade, Wall Street is grumpily firing back with Apple stock off 2.25%, while the S&P 500 trades down 1.20%.
In a nutshell, President Trump said talks between the two economic giants, which were scheduled to resume this week in Washington but now may be nixed, are progressing “too slowly” for his liking.
Trump is now threatening to raise the existing 10% tariff on goods worth $200 billion to 25% by this Friday and an additional $325 billion in goods at 25% “shortly.” The about-face comes a couple of days after he said negotiations had been “going along pretty well” and Apple’s own CEO Tim Cook noted improved trade talks between the U.S. and China following the company’s earnings report last week.
I’m just waiting to tune in to HBO and see what Bill Maher has to say about this week’s political theater. In the interim, tuning in to the Apple stock charts suggests Monday’s reaction, much like the POTUS, may be all bluster and nothing to take too seriously in the grand scheme of things.
Apple Stock Monthly Chart
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Look at the monthly view of AAPL and it’s easy enough to see that Apple stock is in an uptrend. That’s backed by the shares’ higher highs and lows on the price chart as far as the eye can see.
Still, before Apple is able to reaffirm its bull market with a fresh all-time and higher high pattern, four-straight months of rallying into the 76% retracement level does open the door to a counter-trend pullback. As such, a more opportunistic purchase on deeper, but constructive price weakness still looks to be in the cards.
Apple Stock Daily Chart
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Shifting to a daily perspective on Apple stock, investors can see a nicely defined uptrend has formed since last year’s ubiquitous bear market left its mark on AAPL shares.
Thus far, Monday’s reaction to Trump’s tweet has resulted in a successful test of last week’s bullish earnings gap. The support in Apple stock is impressive. As noted, though, I’m not confident it should be believed.
Given the duration of AAPL’s largely unchallenged rally, my recommendation is to wait for a slightly larger and constructive price drop. Technically, I’d like to see Apple stock’s up-channel line and the base’s 62% retracement level near $197 be tested before making a buy decision.
Ultimately, price action like that could always result in a “be careful what you ask for” situation. As such, I’d look for a pivot low to be confirmed and base a stop-loss strategy around it. Alternatively and in an imperfect world where bad actors can become President and algorithms run the show, I’d rather forfeit owning Apple today and risk those consequences, than chase shares today.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
