Apple Stock This Week: Not Going Far
This was quite an eventful week in the stock market.
Joe Biden was announced President-elect by virtually all decision desks on Saturday, and the futures market looked promising on Sunday evening. Adding fuel to the fire, Pfizer announced great news on the coronavirus vaccine front on Monday early morning, and stocks went into overdrive.
However, especially as momentum waned quickly for tech and growth stocks between Monday and Tuesday morning, Apple did not fully participate in the rally. Shares were up a modest 0.6% for the week by Friday’s closing bell, underperforming the S&P 500 by about 1.5 percentage points.
The FAAMG-ex Apple group of Facebook, Amazon, Microsoft and Alphabet dipped much further: down 3.4% for the week. Over the past month, however, the rest of FAAMG has been performing better than Apple by about 4 percentage points.
Apple remains in what appears to be a partial recovery from the September and October “funk”. Trading at just short of $120, shares remain around 11% off all-time highs, near the edge of correction territory (which is usually defined as a 10% drop from all-time highs).
The graph below illustrates this week’s price action – Apple is the blue line.
Not unlike what we saw last week, Apple share price movements were very much driven by the general mood of the market, particularly the tech-rich Nasdaq.
The day that set Apple apart from the S&P 500, and not in a good way for shareholders, was Monday. The first business day following the preliminary election results and vaccine news was great for the broad market, but not at all for growth and tech stocks like Apple, which tend to benefit from the stay-at-home trade and flight to quality.
It is unclear if Business Insider’s report that Warren Buffett’s Berkshire Hathaway likely sold $4 billion of Apple stock in the third quarter impacted investor sentiment. Remember that, by the most recent count, virtually half of the conglomerate’s portfolio was allocated to shares of the Cupertino company.
There were a handful of bullish developments during the week that likely led to Apple outperforming its FAAMG peer group and the Nasdaq.
First, the announcement of the new Mac devices on Tuesday seems to have been well-received by investors and enthusiasts alike. Even before the event, some sell-side analysts already seemed highly optimistic about the new lineup of products. On Tuesday, Apple stock still finished the trading session down -0.3%, but much less than the Nasdaq and its -1.8% decline.
Also, a Keybanc survey suggested that initial demand for the iPhone 12 has been healthy. Keep in mind that sales of the 5G-capable smartphone is probably at the center of every bullish thesis for 2021.
Below is a chart that compares the performance of Apple stock against the S&P 500 and the industry. Apple’s dashboard looks best when looking from a long-term perspective. Shares continue to trade above the 50-day (barely) and 150-day moving averages.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)