Apple Inc. (NASDAQ: AAPL) stock, once the belle of the bull market ball, is now stuck in a bit of a pickle, thanks to a storm of challenges raining on its parade. Recently, it took a nosedive of over 6% in just two days due to worries about a Chinese government ban on iPhones for state officials and employees. On top of that, Huawei has revealed a new device that’s giving the iPhone a run for its money in the high-end smartphone arena.
These hurdles are throwing some shade on Apple’s growth potential, and it’s not just because of a gloomy high-interest rate environment that’s put a damper on consumer enthusiasm for their pricey devices. Even the grand unveiling of the iPhone 15 failed to whip up investor excitement. The absence of price hikes has painted a rather bleak demand scenario, which might slice into their profit margins. And as if that wasn’t enough, the US just dropped its latest inflation data bombshell. The headline figure jumped from 3.2% to 3.7%, surpassing the 3.6% consensus, potentially leaving us with higher interest rates for longer – a recipe for keeping consumer spending in the budget-conscious lane.
Technical
On the 4H chart, a breakdown from an ascending channel formation has seen the share price trickle toward support at $173.95 as the bearish pressure proved too much for the 50-SMA (blue line) support. However, with the 25-SMA (green line) trading above the 50-SMA, the medium-term momentum still tilts to the upside.
With the daily pivot resistance established at $177.08, the share price could continue its descent below $173.95, with support at $171.77 (S2) close by. A sustained downtrend could then lead the price toward $170.16 and $168.04.
However, with its established prowess in the lucrative technology industry, traders could be looking for opportunities to get exposure to Apple at lower valuations. As a result, some profit-taking on short positions could inject new life into the share price if it crosses the 50-SMA close to $179.78. Resistance at $182.39 (R2) could halt the upside momentum, but a sustained rally from the recent lows could move to close the gap at $187.31 if the share price manages to cross $184.88.
Summary
While Apple stock has recently fallen out of favour with investors, the downside could be limited due to its competitive positioning in the market. Shorter-term bearish pressure could, however, persist toward $170.16, where a potential pivot is on the cards due to possible profit-taking reactions.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
