Apple AAPL -2.84% stock fell again in Tuesday trading, leaving investors to wonder when the iPhone maker’s shares will bottom out. Stock charts can help answer that question.
In early trading, Apple stock was down 2.9%, while the S&P 500 SPX -1.02% and Nasdaq Composite COMP -1.65% were off about 01.1% and 1.0%, respectively. If shares finish lower on Tuesday, it will be Apple’s fifth consecutive drop and the seventh decline out of the past eight trading sessions. Through early trading Tuesday, shares were down about 11% year to date, trailing the Nasdaq by about 18 percentage points. Things just haven’t been going well for Apple shareholders lately.
“Apple has broken down below support near $179 to $180 in a bearish short-term development,” says Fairlead Strategies founder and market technician, Katie Stockton. Support levels represent where investors find a stock attractive enough to buy shares after a recent decline.
If Apple hits the $170 level, that would likely be a longer-term setback for the stock, she adds. “Secondary support is approximately $161.”
Stockton isn’t making a fundamental call on Apple’s artificial intelligence initiatives or sales of the new iPhone. She looks at stock charts to get a sense of where the shares can go over the short and medium term. Stock charts contain a lot of information about where investors have found shares attractive, and less attractive, in the past, as well as when investor sentiment has changed materially.
The $160 level is something investors can watch out for. CappThesis founder Frank Cappelleri sees support for Apple stock at about $165—similar to Stockton. If shares fall below that level, another market technician sees the stock falling further.
John Roque, senior managing director and head of technical strategy at 22V Research, pointed out in January that Apple’s stock chart was looking weak. He followed up in late February with a bearish outlook.
“The following will likely not sit well with many, but amid all the kumbayas regarding the S&P’s all-time high(s), it is worth noting that Apple is already bearish relative to the S&P 500 as it trades at a one-year relative low and at relative levels first seen in August 2020,” he wrote at the time.
If Apple stock breaks below $165, Roque believes it will go to $130—where shares traded at in 2021. The $130 level would leave Apple trading for about 20 times estimated earnings—a similar multiple to the S&P 500. Apple stock traded for about 20 times earnings for much of 2019.
Among Wall Street analysts, the average price target for Apple shares is about $200, up about 18% from recent levels. A year ago, the average price target was about $170, about 10% higher than the $155 level the stock was trading at then.
