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Apple Stock: What To Expect In The Next Few Days

Apple stock has been losing ground in the past month, in line with bearish broad market behavior. Here’s what investors should expect of (and do about) the next few days.

While stocks finally found some support on Wednesday, September 28, the tone in the markets has turned overwhelmingly bearish in the past weeks. The culprit is the increasingly hawkish stance of central banks around the world as they fight hard to keep inflation under control.

Apple stock  (AAPL) - Get Free Report, at times more resilient than most other stocks in 2022, has also felt the pinch. Shares have been down 7% in the past month, roughly in line with the losses seen in the S&P 500  (SPY) - Get Free Report.

What should investors expect of AAPL going forward? Is this most recent pullback, which brings Apple’s YTD losses to 17%, an opportunity to buy the weakness? Or should shareholders be more conservative in the face of deteriorating market sentiment?

Here’s one way to think about the next few days for AAPL – and for equities at large.

Figure 1: Apple Stock: What To Expect In The Next Few Days

Figure 1: Apple Stock: What To Expect In The Next Few Days

AAPL: volatility on the rise

I wish I had a crystal ball that told me what will happen to asset prices in the future. Obviously, I don’t have it, and this is something that investors should keep in mind when making decisions. An investment strategy that relies on consistently predicting the future is just not good enough.

One thing is obvious, however: volatility is back on the rise.

The chart below shows the 12-month trailing volatility in Apple stock, in annualized terms. The higher the number, the more share prices tend to jump up and down. AAPL’s 31.5% today is nearly four percentage points higher than the average of the past decade.

Aside from the first few months of the COVID-19 crisis, this is about as jittery as Apple stock has been in the past decade.

Figure 2: AAPL 12-month rolling volatility, past 10 years.

Figure 2: AAPL 12-month rolling volatility, past 10 years.

Why do I care about volatility?

AAPL’s price has been fluctuating more wildly lately, but so what? Shouldn’t volatility help to uncover good deals in the market, as long-term investors are able to buy low and hope to sell high in a few months or years?

Generally, this has been true of AAPL and the US stock market. In fact, I have written plenty about “the best investment strategy”: buy Apple stock at a 15% drawdown or worse, as is the case now, for 12-month returns that could be five or more percentage points better than average.

But doing so and hopefully capturing better future gains come alongside increased risk. Sure, AAPL has historically recovered from sharp pullbacks – every single time up to this point. But don’t expect the path of recovery to be up and to the left.

Investors that choose to hang on to the same AAPL position during bull (calm) and bear (chaotic) markets should expect one thing: to see their portfolios swing a bit more vigorously from day to day.

Can you handle the uncertainty? If so, I believe that owning and even accumulating more Apple shares today makes the most sense.

Otherwise, the more conservative and risk-averse investors looking for a less erratic journey ahead might want to trim their stock position. Once again, in the absence of a crystal ball, the best course of action is to understand one’s risk tolerance and position the portfolio accordingly.

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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)