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Apple stock faces major test that could turn ‘quite bearish,’ analyst says


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After a nearly 14% drubbing in December, Apple stock now sits at a key technical juncture that has chart watchers eyeing further declines for the tech giant’s shares.

“One of the most important items we’ll be watching over the next week or two will be the action in Apple,” Matt Maley, chief market strategist at Miller Tabak, wrote in a new client note on Wednesday. “The reason that the $130 level is so important is because it’s where the lows from June come in (which was the low for 2022). Therefore, any meaningful break would give the stock a key ‘lower-low’…and that would be quite bearish because Apple has already broken below its trend-line from the March 2020 pandemic lows (and below its 200-day moving average).”

Apple’s stock violated the $130 level on Wednesday, falling 2% to $127 in afternoon trading as concerns spread about the pace of the economic reopening in China.

It’s not surprising to see it drop below the key technical level, as Maley noted Apple’s stock tested the $130 level on four of the past five trading days ahead of today’s session.

“If Apple breaks below the $130 level any time soon (either now…or after a very-short-term bounce)…after already breaking below an important trend-line and an important moving average…it’s going to be quite bearish for the stock on a technical basis,” Maley added. “Given that Apple is such an important leadership stock, an important breakdown in the stock at any point in the next 1-3 weeks will not be great for the broad stock market either.”

Apple stock has declined despite it often being viewed as a safe-haven investment with a formidable balance sheet flush with cash and a steady stream of repeatable services income.

But just like other large companies, the volatile global economic backdrop has hit Apple in the form of slowing iPhone and accessory sales as well as production delays out of COVID-stricken China.

An Apple store in Shanghai, China, June 23, 2022. (Photo: CFOTO/Future Publishing via Getty Images)

The external crosscurrents have sent most analysts on the Street back to the drawing board with respect to their financial estimates for Apple.

“We are again moderating our expectations for the Dec-Q (F1Q23) on the back of the impact of the recent supply chain challenges faced by Apple in relation to operations at Hon Hai’s assembly facility in Zhengzhou, China,” JPMorgan tech analyst Samik Chatterjee wrote. “While the rapid extension of lead times for the iPhone 14 Pro / Pro Max has slowed down and in fact began to moderate in recent weeks, it still remains elevated relative to the lead times seen prior to the COVID outbreak in Zhengzhou as we continue to see the supply shortfall continuing through year-end and impacting the typical seasonal uptick in iPhone volumes seen in Dec-Q.”

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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