What’s Ahead for Apple After Its Recent Malaise

The Nasdaq has gained around 11% since its January (2024) low.

But it has left behind one of its major constituents – Apple (AAPL).

After rallying last month, the tech giant rolled over and is now trading flat for the year. What’s more, Microsoft (MSFT) recently surpassed it as the U.S.’s largest stock.

Go further back, though, and the chart shows that AAPL has been stuck in a malaise since July last year.

So today, I want to check in on AAPL to see where things could be headed from here…

Finding a Base

The left-hand side of the chart shows AAPL’s clear uptrend at the start of last year.

The 50-day Moving Average (MA, blue line) trended strongly higher with the 10-day MA (red line) bullishly tracking above it…

Apple (AAPL)

Source: eSignal

But that rally reversed sharply in July after AAPL announced disappointing earnings and the Nasdaq rebalance reduced its weighting in the index.

From there, AAPL drifted lower, making lower highs and lower lows.

This action coincided with several bearish signals:

1. The Relative Strength Index (RSI) fell through support (green line). That showed buying momentum was waning. That’s where the RSI mainly tracked until AAPL started to counter-rally late in October.

2. The 10-day MA retraced lower and crossed below the 50-day MA, pulling both MAs down.

3. The blue MACD line crossed beneath the orange Signal line. Both fell bearishly below the zero (0.00) line.

Yet AAPL’s counter-rally began in October with the RSI forming a ‘V’ and rallying from oversold territory (lower grey dashed line).

That rally accelerated as the RSI broke up through resistance and gained traction in its upper band.

You can gauge the strength of that move by the rate at which the 10-day MA crossed and accelerated above the 50-day MA.

Take another look:

Apple (AAPL)

Source: eSignal

But the RSI reversed from overbought territory. That locked in AAPL’s peak on December 14.

AAPL drifted lower before finding a base in early January when the RSI again rallied from oversold territory.

And it’s this base – or short-term support level (horizontal orange line) – that I’m watching closely right now.

As you can see, AAPL has tested this level multiple times since the start of this year. And so far, it has held.

But what am I looking for next?

The $180 Level Is Key

The longer and more often a level is tested and holds, the stronger that level becomes.

And the bigger deal it is if that level is broken.

That’s why the action around the $180 level will be key.

If AAPL breaks below support, that could start a leg down. The RSI staying in its lower band will increase the odds of this down move.

And all that could provide the setup for a potential short trade.

Beyond that, given its sheer size and influence, an emerging downtrend in AAPL will have wide (negative) consequences for the major indices.

So this will be a stock worth keeping an eye on…

Regards,

Larry Benedict
Editor, Trading With Larry Benedict