Apple stock (AAPL) - Get Apple Inc. Report ended the Monday, May 24 trading session up 1.3%. This was the second time in the past three business days that the stock raked in gains above 1%. Now, AAPL is inches away from leaving correction territory (i.e. a dip of 10% or more below all-time highs) for the first time since early May.
Does the recent move higher in Apple share price signal that a new peak is finally within sight? Here are three reasons why the Apple Maven believes that this could be the case.
#1. Epic battle: cease fire
The legal fight between Apple and Epic Games has likely been a drag on investor sentiment. The Apple Maven has been following the developments closely, believing that the outcome of the hearing could eventually impact Apple, its P&L, and its stock materially.
The good news is that, while the dispute is far from being resolved, the issue could be less of an overhang on share price performance in the foreseeable future. Epic Games and Apple presented their closing arguments on May 24, and the trial may cease to hijack Apple’s headlines for the next few weeks – until a verdict is reached and the losing party appeals to a superior court.
With Apple’s business having performed so well in the past few quarters, maybe all that AAPL stock needs to find its way north again is a bit of time off the spotlight.
#2. Inflation fears subside
One of the key disrupters in the equities markets over the past couple of weeks has been inflation fears. With the loss of purchasing power leading to concerns over rising interest rates, growth stocks took a beating in mid-May, sending Apple stock back to August 2020 levels.
However, it looks like most the inflation worries have been left behind – or merely priced into risk assets. For instance, the 10-year treasury yield began to move lower once again, to 1.61% on May 24, after flirting with 1.7% on May 12. Probably not a coincidence, Apple stock performed better after the retreat in rates over the past few business days.
More data on consumer prices is set to be delivered soon, including a read on April PCE inflation on Friday, May 28. This time, however, the market is unlikely to be caught off guard.
#3. 200-Day moving average holds
On May 19, I noted how Apple stock has consistently bounced off its 200-day moving average since, at least, first half of 2019. AAPL shares tested those levels once again in the past few trading days – and they passed the test with flying colors. See chart below, blue against grey lines.
From this technical bottom, Apple stock could reach higher. The next challenge for shares, certainly, will be to break through and stay above the low $140s, something that has yet to happen.
How long will it take for Apple stock to reach (and breach) its all-time high that has persisted for nearly four months? Leave your opinion below.
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(Disclaimers: this is not investment advice. 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)