Much like chipmaker Nvidia (which we checked out yesterday), tech giant Apple (AAPL) had a huge start to 2023.
From its January low to its mid-year peak, AAPL rallied almost 60%. That move up pushed its market cap beyond $3 trillion.
But disappointing Q3 earnings and the Nasdaq rebalance saw AAPL reverse in mid-July.
AAPL bottomed out in late October. Then it joined in the broader market rally, gaining 20% by mid-December.
Yet AAPL has reversed and slid since then. So let’s check out what’s coming next…
Breaking Through Resistance
The chart of AAPL below shows its huge jump from the start of last year.
That surge began with a big reversal (upward) in momentum. Buyers clamored to get back into the stock after dumping it the previous year.
Apple (AAPL)
Source: e-Signal
The Relative Strength Index (RSI) shows that increase in buying momentum.
It rose from oversold territory (lower grey dashed line). Then it bullishly broke through resistance (green line) and established itself in the upper half of its range.
And as you can see, it remained there throughout AAPL’s uptrend.
The 10-day Moving Average (MA, red line) also confirmed the rally. It broke strongly above the longer-term 50-day MA (blue line). And both MAs tracked higher.
Yet in mid-July, these bullish signals started to reverse…
A clear diverging pattern between the RSI and the AAPL stock price (left orange lines) triggered this reversal.
As the chart shows, the 10-day MA fell back. It slipped below the 50-day MA, with both MAs also trending lower.
The RSI reversed (downward) too. It remained stuck in its lower band apart from AAPL’s minor countertrend peaks in September (‘a’) and October (‘b’).
Then AAPL’s late-year rally got underway. The RSI shot up from oversold territory (left red circle).
But a repeat of July’s reversal pattern caused AAPL to top out mid-December.
Apple (AAPL)
Source: e-Signal
Steadily declining buying momentum (lower orange line) and AAPL making higher highs (upper orange line) eventually pulled AAPL down.
As the chart shows, that down move accelerated. The RSI fell through support and into the bottom half of its range.
But the RSI is in oversold territory again (right red circle). That hints AAPL could be setting itself for another bounce.
So let’s examine what to look for from here…
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An All-time High
After recently making a ‘V’ from oversold territory, the RSI is rising toward resistance (green line).
For AAPL’s recent bounce to turn into a rally, the RSI needs to break back up into the upper half of its range.
That kind of move could soon send AAPL trading back above $190.
The next test for a longer-term rally is for AAPL to take out its December 14 all-time high ($199.62).
Also, traders should keep tabs on our two MAs. AAPL’s slide from its mid-December peak has put the 10-day MA within a whisker of crossing below the 50-day MA.
The 10-day MA rising higher from here would bulk up any potential rally.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
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