Apple Stock: What Are The Next Catalysts?

Apple stock has had a solid June so far, but which way will shares go next? The Apple Maven presents the catalysts that will most likely nudge AAPL higher or lower in the next several weeks.
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Apple stock  (AAPL) - Get Report continues to stand out amid an equities market that has just started to wobble. Shares of the Cupertino company have not had an easy 2021 so far, but June has been a much better month: gains of nearly 5% against a slight decline in the S&P 500.

Today, the Apple Maven looks at potential catalysts that may determine the direction of AAPL share price in the foreseeable future – say, the next few weeks or months.

Figure 1: AAPL monthly chart on June 21.

Figure 1: AAPL monthly chart on June 21.

Read more: Buy Apple Stock After The Fed’s Meeting

Macroeconomic catalysts

Over the past decade, Apple stock has been correlated with the broad market at a factor of nearly 0.6 out of a maximum of 1. In plain English, this means that AAPL shares are likely to be swayed by macro-level factors like economic activity, inflation, interest rates, etc.

Apple’s next move, higher lower, may very well be associated with the hottest topics in the market today, particularly monetary policy. The S&P 500 felt the heat of the Federal Reserve’s suggestion that short-term interest rates will likely climb in 2023, ahead of previous expectations.

The next catalyst for Apple, therefore, might be data on inflation over the next months. Should it come in too hot, interest rate expectations will likely rise, pressuring AAPL. Should it be tame instead, Apple will likely benefit from low yields and, possibly, a flock to quality amid doubts over the recovery.

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Company-specific catalysts

Apple-specific factors could also impact how shares behave. On the potentially bearish side, the company is one of the targets of antitrust scrutiny. Should Congress move fast on the proposed legislation to curb the power of Big Tech, Apple stock could take a hit.

On the bullish end, summer has historically been a good season for Apple stock (see below). The Apple Maven believes that there is more to the story than just coincidence.

Figure 2: AAPL Average monthly return vs. S&P 500 (seasonality).

Figure 2: AAPL Average monthly return vs. S&P 500 (seasonality).

July and August are likely the months during which investors begin to anticipate two crucial dates for Apple: (1) the launch of the next iPhone and (2) the holiday shopping season. It has become common for the stock to benefit from the year-end chatter before sell-the-news pressures take over in Q4.

Lastly, fiscal third quarter earnings day is just around the corner. Apple should be releasing its results near the end of July, if not early August. Ever since Apple’s blowout report in April, Wall Street has been dialing up its expectations for the next period: EPS of $1.00 now vs. $0.81 in March.

It is hard to tell whether earnings season will be a positive or a negative for Apple stock. It all boils down to expectations: can the company follow through on impressive late-pandemic results, or will the reopening of the economy spell trouble for the 5G cycle, Mac and iPad momentum and service sales?

Twitter speaks

The Apple Maven recently asked Twitter for an opinion on what could be the next catalyst for Apple shares. Below are the responses:

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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)