{"id":2333,"date":"2024-03-23T00:02:17","date_gmt":"2024-03-23T00:02:17","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/23\/look-out-below-the-bear-case-for-apple\/"},"modified":"2024-03-23T00:02:17","modified_gmt":"2024-03-23T00:02:17","slug":"look-out-below-the-bear-case-for-apple","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/23\/look-out-below-the-bear-case-for-apple\/","title":{"rendered":"Look Out Below! The Bear Case For Apple"},"content":{"rendered":"
\n

The big news for Apple Inc. (AAPL) this week was a huge antitrust case from the US government.\u00a0While the outcome of that particular situation is uncertain, one reality that has been quite certain is that AAPL is no longer pounding higher like its \u201cmagnificent\u201d brethren.<\/p>\n

Today we\u2019ll show how the technical picture for Apple has gone from bullish to neutral to bearish, why multiple timeframes can be super valuable in separating the signal from the noise, and how we can identify potential downside objectives for stocks in breakdown mode.<\/p>\n

I was taught, \u201cWhen in doubt, zoom out.\u201d\u00a0So, with that in mind, let\u2019s start with the weekly chart.<\/p>\n

Three things stand out as I review the last seven years of Apple\u2019s price history.\u00a0First, the long-term story is quite constructive, with the stock going from below $40 to almost $200 in less than five years.\u00a0The 150-week moving average, one of my favorite long-term gauges of trend, has been sloping higher, and numerous tests of the 150-week moving average on the way up have held just fine.<\/p>\n

Second, we observe a couple breaks of the 40-week moving average, which I use on the weekly chart because it lines up well with the 200-day moving average.\u00a0The last time we had a confirmed break of the 40-week moving average was in Q2 2022, which ended up leading to an additional decline until the eventual low in December 2022.<\/p>\n

Finally, the PPO indicator generated a sell signal in July 2023, when the PPO line broke down through the red signal line.\u00a0This pattern tends to occur after a long bull phase, and suggests that the July peak was a meaningful one for AAPL.<\/p>\n

The next chart we\u2019ll review uses my Market Trend Model<\/a>, a proprietary model based on a set of weekly exponential moving averages.\u00a0This model gives a trend signal for three time frames: short-term (a couple days to a couple weeks), medium-term (a couple months), and long-term (over a year).<\/span><\/p>\n<\/p>\n

At this point, the model is reading short-term bearish, medium-term bearish, and long-term bullish.\u00a0This lines up with our initial review of the weekly chart, in that the long-term story appears constructive, but the evidence has been mounting in recent months that the July 2023 high was a significant one for the stock.\u00a0It\u2019s worth noting that the long-term model is very close to turning negative, which would be the first bearish signal since September 2022.<\/p>\n

Now let\u2019s check the daily chart to see how last week\u2019s price action relates to the longer-term trends we\u2019ve observed thus far.<\/p>\n<\/p>\n

Here, we can see the double top pattern where the December 2023 high lined up almost perfectly with the July 2023 high.\u00a0After a subsequent retest of this resistance level in January 2024, Apple dropped from a peak just below $200 to its recent swing low around $169.<\/p>\n

Taking the January 2023 low and July 2023 high as a framework, we can use Fibonacci retracements to identify potential downside targets.\u00a0The 38.2% level hits right around $169, which lines up with the September and October 2023 lows, as well as the recent price action for AAPL.<\/p>\n

The red-dashed line represents a support level drawn from the January 2024 test of the 200-day moving average.\u00a0There were four additional tests of this support level before AAPL finally broke below at the beginning of March.\u00a0The last few weeks have seen Apple bounce between support around $169 and resistance around $180, giving us a fairly clear range with which to consider the next move for this key growth stock.<\/p>\n

If AAPL would break below this confirmed support level around $169, that would represent a new 10-month low and open the door to further support around $160, and perhaps even the 61.8% retracement level around $152.\u00a0If, however, investors become optimistic on Apple\u2019s prospects despite the recent antitrust claims, a break above $185 would mean a valid break above resistance as well as the crucial 200-day moving average.\u00a0In that case, a retest of the all-time highs around $200 would seem a plausible scenario.<\/p>\n

The most concerning feature of this chart, by far, would be the declining relative strength in the bottom panel.\u00a0The downtrend in this series shows that while Apple has begun its short-term decline off all-time highs, the stock has underperformed the S&P 500.\u00a0Owning names that underperform the S&P 500 is a sure way to underperform the S&P 500 in your portfolio!<\/p>\n

While this week\u2019s news on Apple has caused many to revisit a bullish thesis on this long-time winning stock, a thorough review of the weekly and daily charts tells a potentially dire story that has been building for months.\u00a0Mindful investors know that technicals tend to lead the fundamentals, and a weakening chart is usually a sign of an ominous future!<\/p>\n

<\/div>\n

RR#6,<\/p>\n

Dave<\/p>\n

P.S.<\/strong> Ready to upgrade your investment process?\u00a0Check out my free behavioral investing course<\/a>!<\/span><\/p>\n

David Keller, CMT<\/strong><\/p>\n

Chief Market Strategist<\/p>\n

StockCharts.com<\/p>\n

Disclaimer: <\/em><\/strong>This blog is for educational purposes only and should not be construed as financial advice.\u00a0The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The big news for Apple Inc. (AAPL) this week was a huge antitrust case from the US government.\u00a0While the outcome of that particular situation is uncertain, one reality that has been quite certain is that AAPL is no longer pounding higher like its \u201cmagnificent\u201d brethren. Today we\u2019ll show how the technical picture for Apple has […]<\/p>\n","protected":false},"author":0,"featured_media":2334,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-2333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=2333"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2333\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/2334"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=2333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=2333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=2333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}