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Traders are closely monitoring Apple Inc. as its stock dipped below a key psychological level on Tuesday, signaling its first technical correction since August, according to a Bloomberg report.
The stock, failing to maintain the $180 support level last week, dipped below $170 during Tuesday’s session, potentially indicating a further decline to its October low of $165.67, according to Todd Sohn, managing director of ETF and technical strategy at Strategas Securities.
Sohn noted that while Apple is a highly influential stock and could experience a short-term bounce after being oversold, traders might still seek to sell it off around the $180 mark due to its deteriorating trend.
Apple’s shares have dropped nearly 12 percent this year, losing over $300 billion in market value since hitting a record high in December. This has led to Microsoft Corp. overtaking Apple as the most valuable US company, while other tech giants like Nvidia Corp., Meta Platforms Inc., and Amazon.com Inc. continue to surge.
Apple is facing several challenges all at once. First, the growing scrutiny outfits control over the Apple App Store and how Apple has maintained its dominant position in the market.
There have been some massive fines that Apple has had to deal with. The recent $2 billion fine imposed by the EU on Apple is just one of many examples where the tech giant may not be able to wriggle its way out of this.
Then there is the fact that Apple faces one of its worst slumps in one of its biggest markets. Declining sales in China have worried investors about its growth prospects. And not just in China; Apple faces issues with demand for its latest and greatest almost everywhere.
Finally, Apple has been slow to respond to AI compared to other tech companies. It has been so late for the AI party that its stakeholders and shareholders had to tell Tim Cook not to be so secretive about AI.
Short sellers have capitalized on Apple’s struggles, making it the second-most profitable short position in February, according to data analytics firm S3 Partners.
The broader tech sector may face pressure in the coming months if Apple falters despite Nvidia’s strong performance. However, Apple’s correlation to the S&P 500 is not as tight as some may assume, indicating that the overall market can rise even if Apple’s stock remains stable.
From a technical standpoint, as long as Apple’s stock maintains its multi-year uptrend from its 2020 lows, the US stock market could continue to advance. Mark Newton, head of technical strategy at Fundstrat Global Advisors, views any weakness in Apple over the next month as an opportunity to buy, considering the stock potentially attractive.
