Apple shares have been recovering from the “mini-bear attack” of September, when they quickly dipped 20.4% from the all-time high. But investors, used to seeing the stock perform superbly in the past couple of years, could be frustrated by the lack of further traction.
Apple has been “stuck” in a tight price range of about $15 to $20 per share for the past three months, even though the broad market has enjoyed a strong rally during the same period.
Not going far
Notice below how Apple, in blue, has failed to trade higher than $125 apiece since September, even though shares reached those levels a couple of times in the past three months, before U-turning.
On the downside, the stock keeps bouncing off lows that, to be fair, seem to have been moving higher week after week.
I am far from being decent at technical analysis – i.e. chart reading. But it seems obvious to me, from the chart above, that Apple stock has met enough sellers at the mid-$120 levels recently. At that point, maybe enough shareholders have been finding good reasons to lock in profits.
To break through these levels, Apple needs either of the following, or both:
- Time: given enough opportunities, sellers will eventually flush through the system. Beyond that point, buyers may start to “overwhelm” the market, causing upward price pressures.
- Catalysts: as I have discussed in the past, Apple has largely run out of headline-grabbing catalysts for the remainder of the year. A wave of new ones, likely in 2021 only, may be what the stock needs to find buyer support once again.
Potential catalysts on the horizon
I believe there is little in 2020 that could nudge Apple higher, other than a potential rally in the broad market that “lifts all boats”. One of the few candidates might be favorable third-party data on holiday sales.
Most likely, Apple stock will only find its way north again in the new year. Expect the company to report fiscal first quarter results on January 28. The iPhone 12 is likely to be the center of attention – since the device was launched later than expected in 2020, but still in time to make a splash in the holiday season.
Speaking of smartphones, chatter about the iPhone 13 could start to surface as early as the first few months of the year. The new model, allegedly in the design and production pipeline already, could help to support bullishness towards the second leg of the 5G super cycle.
Lastly, new Mac devices with ARM-based architecture will probably catch the attention of users and investors. Expect redesigned MacBook Pros to be unveiled, and keep an eye on Mac sales during a year of tough comps.
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