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Of the mega-cap growth stocks, Apple (AAPL) has certainly been a bit of a technical outlier in recent months. While names like Meta and Nvidia have been pushing to new all-time highs, AAPL has essentially been rangebound since July 2023. Earnings this week could finally provide an upside catalyst for the stock, but will it be enough to propel AAPL higher to exit this range to the upside? Since the end of July 2023, Nvidia has gained about 32%, and Meta sits just below the 25% line for that same period. Apple is down 5.5% for that same period, as investors’ AI-fueled optimism has been focused elsewhere. So while we tend to think of stocks in groups like the “Magnificent 7” or “FAANG” names, the reality is that these leading growth names are starting to look a bit less homogenous in early 2024. Looking at the last 18 months for Apple, you’ll see how 2023 was truly a “tale of two halves” with a strong first half and a choppy second half. AAPL gained about 60% from the end of 2022 to the end of July 2023. The next three months saw a stepwise decline of lower highs and lower lows, pushing the stock down from a peak around $198 to its eventual low around $165 in late October. That downtrend in Q2 began with a gap below the 50-day moving average in early August and continued with a number of failed attempts to regain that 50-day moving average on the way down. The September low around $169 represented a 38.2% Fibonacci retracement of the January 2023-July 2023 rally, then the October low was a retest of that support along with the 200-day moving average. Apple reports after the bell Thursday. Chart suggests exhaustion Over the last three months, Apple has basically bounced back and forth between retests of the July high of around $198 and the 200-day moving average. Check out the short-term rally in November-December, and note that while the price was sloping higher, the RSI below was sloping lower. This bearish momentum divergence suggests exhaustion of upside momentum and leaves me skeptical of further upside here. If AAPL surprises to the upside, then it’s all about the well-established resistance level around $197-200. After a price breakout, resistance levels often serve as support going forward. So $200 is where I have an alert set on the upside, and if and when AAPL can break this level, then this chart becomes a “big base breakout” with significant upside potential. But I’m focused way more on the bear case, given the Fed’s dovish pivot this week and the bearish divergence mentioned above. Key levels to watch include the 200-day moving average around $182, as well as the January swing low around $180. If this level would break, I’d look for further support at the September-October lows around $165-170. So far this earnings season, we’ve seen leading growth names struggle even in the face of strong results. From a technical perspective, Apple still has much to prove before it’s considered a leadership name in early 2024. -David Keller https://www.marketmisbehavior.com DISCLOSURES: (none) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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