The recent performance of Apple stock has investors concerned about its future trajectory. While it may be tempting to see the current dip as a buying opportunity, experts suggest exercising caution. The stock has enjoyed significant success over the past decade, but recent declines and the chart’s worrisome pattern indicate a potential downward trend.
On Wednesday, Apple stock dropped 1.1%, further adding to its post-earnings losing streak that began the day before. The company’s revenue decline, coupled with hardware sales slipping, compounds the problem. Additionally, the stock’s current trading position below its 50-day moving average raises concerns. This is the first time in 136 trading days that Apple has closed below this average, a streak unrivaled since 2009.
Analysts from Bespoke Investment Group note that this recent break has resulted in significant technical damage within a few trading days. This suggests that there may be more short-term pain ahead. Based on historical data, past instances of Apple falling below its 50-day moving average after trading above it for 125 days or more have seen an average decline of 6.2% over the next month, with mixed returns over the following three months.
However, it is not all doom and gloom. Despite these near-term challenges, Apple has historically rebounded strongly after such breaks. Over the six and 12 months that follow, the stock has posted solid gains. Given Apple’s track record as one of the top-performing stocks in recent decades, investors should monitor this near-term weakness closely, as it could signal an upcoming buying opportunity.
Katie Stockton of Fairlead Tactics suggests that this correction period for Apple stock could potentially last up to eight weeks, with shares targeting $170, reflecting a 4.3% drop from the current price of $177.64.
In conclusion, while Apple stock currently faces challenges, it may present a buying opportunity in the future. Investors should remain vigilant, paying attention to the stock’s performance and market trends before making any decisions.