Bullish Outlook: Consider Buying the (Big) Dip In Apple Inc. (AAPL)
Warren Buffett has uttered many now-immortal words. One thing he’s famously reported to have said is that it’s wise to be “… greedy when others are fearful.” This may very well sum up what’s happening with Apple Inc.’s (AAPL) stock right now.
The stock price had already been declining sharply since early October, and was spiraling ever lower just last week. But on Monday, it broke down even further, gapping well below the psychologically significant $200 price level and hitting a new three-month low in the process – well in correction territory. Monday’s further plunge occurred after a key supplier to Apple cut its own earnings and revenue outlook. Apple’s stock had already suffered a major blow after its November 1 earnings release, which was better than expected on both the top and bottom lines, but the company also warned that sales of its flagship iPhone are slowing down.
Despite the recent setbacks, we see the dip in AAPL as temporary. The stock is approaching oversold levels, and the longer-term technicals look promising. AAPL has declined countless times in the past, and those times have always proven to be golden opportunities to buy the stock at a relative discount in the long run. As long as your time horizon is medium- to longer-term, the current fall may well be just such a case. Besides approaching technically oversold levels, AAPL stock has also just come close to touching its 200-day moving average to the downside, a major support level. During the past couple of drops this year, the stock dipped below the 200-day, but reliably popped back above and resumed the uptrend shortly thereafter. Speaking of the trend, both the long- and medium-term trends, as measured by linear regression lines, continue to run solidly to the upside.
The Technicals Rating
The Technicals gives AAPL a bullish rating of 8 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for AAPL, as well as other relevant information that paints a bullish picture of the stock:
- Price Position vs 200-Day SMA: +0.55% (above) – BULLISH
- Position vs 50-Day SMA: -11.62% (below) – BEARISH
- Position vs 20-Day SMA: -9.54% (below) – BEARISH
- 100-Day Trend Slope (Linear Regression): BULLISH
- 200-Day Trend Slope (Linear Regression): BULLISH
- Stochastics (14,3,3) Level: Approaching Oversold – BULLISH
- RSI (14) Level: Approaching Oversold – BULLISH
- Position in Bollinger Bands: At Lower Band – BULLISH
- Sector (ETF: XLK) Long-Term 200-Day Trend: BULLISH
- Sector (ETF: XLK) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BULLISH
- Market (S&P 500) Medium-Term 100-Day Trend: NEUTRAL
- Short Interest Ratio: 0.77% – BULLISH
- Analysts’ Mean Target Price: $236.42 (above current price) – BULLISH
- Last Earnings Move: Sharp Gap Down – BEARISH
Overall The Technicals Rating for AAPL: TTTTTTTTTT (8 out of 10) – BULLISH
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don