Apple stock is making a comeback following a challenging couple of days. Analysts predict that there are more positive days ahead for the tech giant.
According to a recent report from market technician Frank Cappelleri, founder of CappThesis, Apple stock (ticker: AAPL) is currently hovering near three significant support levels on its weekly chart. These support levels are price points at which stocks tend to stabilize during a downward trend.
In just two days, on Wednesday and Thursday, Apple stock experienced a sharp decline of 6.4%, resulting in a market value loss of approximately $190 billion. This substantial decrease caught the attention of all investors, not just Apple enthusiasts.
Cappelleri explains that such drops are not uncommon for Apple stock. In fact, since at least 2008, there has been an annual occurrence of a two-day decline of at least 6%.
What is intriguing to Cappelleri at the moment is that on Thursday, Apple closed precisely at its 26-week moving average, representing two quarters worth of price action. He notes that in 2021 alone, Apple stock has rallied four times after reaching this same level.
Furthermore, Cappelleri highlights that Apple stock is also nearing its breakout zone for 2023 and the 38.2% retracement level of the entire 2023 rally. These levels often act as support for the stock.
Lastly, Cappelleri points out that the previously extreme 14-week relative strength (RSI) reading has now dropped back to the mid-50s, indicating a potential stabilization in the stock.
Overall, with multiple support levels and indicators signaling a positive outlook, Apple stock seems to be on the path to recovery. Investors will be keeping a close eye on its performance in the coming days.
RSI: A Reliable Indicator for Apple Stock
RSI (Relative Strength Index) serves as a valuable tool for traders seeking to gauge the momentum of a stock's price movement. It helps us determine whether a stock reflects an excessive amount of positive or negative news. Typically, a reading of 50 is considered neutral - neither too hot nor too cold. However, a reading of 70 or above indicates that the stock may be overheated and due for a temporary slowdown. Recently, Apple stock reached the 70 zone, signaling a potential upcoming pause after a period of intense buying activity.
It is important to note that Cappelleri's analysis of Apple stock is purely technical in nature. By examining stock charts, he gains insights into the short and medium-term direction of these shares. Stock charts have the ability to reveal the sentiments of a group of investors - whether they are becoming more or less enthusiastic about a particular stock or group of stocks.
Nevertheless, one should bear in mind that charts cannot guarantee any specific outcome. Following Apple's quarterly earnings report on August 4, the stock has experienced some weakness. The company's guidance for the current quarter fell slightly short of Wall Street's expectations, which has raised concerns among investors.
Given this apprehension surrounding the current quarter, it is likely that any potential upside for Apple stock will be limited. However, despite these uncertainties, the charts suggest a more favorable setup for Apple stock. This news comes as a relief for long-term shareholders who have maintained their positions throughout these fluctuations.