After introducing four new 5G iPhones on Tuesday, the stock ultimately closed lower by 2.65%. However, given the pre-event rally of 6.35% on Monday, it’s not hard to blame Tuesday's dip on a bit of profit taking and/or a sell-the-news reaction.
Now things get a bit more nimble.
We have the big event out of the way - which is garnering praise on Wall Street - and investors are looking to see how the stock will set up. Obviously bulls believe the new iPhone will generate significant revenue going forward and into the holidays.
Bears are likely pessimistic after the big rally, believing it’s still a sell-the-news play and that the economy is hurting too much to justify robust iPhone growth.
Throw in the potential for a pre-earnings move ahead of Apple’s fiscal year-end results on Oct. 29 and things get even trickier. Let’s look at the chart.
Coming into the iPhone event, shares of Apple were on the mend after a hard pullback in September. Amid that decline, shares filled the first of two earnings gaps from July. The second remains unfilled down near $96.
Before even getting to that zone though, there’s a lot of support in between.
Zooming in, the stock continues to do a great job holding this week’s low near $119.30. If it continues to hold this spot, traders have to be aware of the potential for a rotation over this week’s high at $125.39. That’s also about where the 61.8% retracement comes into play for the September pullback.
A rotation over these two marks puts the 78.6% retracement in play near $130.50, followed by a possible push toward the all-time highs near $137.50.
On the downside, all hope is not lost should the weekly low be lost. In that event, there’s a strong confluence of support nearby.
Specifically, it would put the $117 area in focus, where Apple stock would find the 50-day moving average, 38.2% retracement and the gap-fill from Friday’s close to Monday’s open.
This is a natural buy-the-dip spot for investors, as it’s around a number of key support marks, while the risk is clearly defined.
A close below $112.20 is an issue, though. It puts the stock below the 20-day and 50-day moving averages, the 10-week moving average and the two-week low. It could put the $103 to $107 area on the table as a result.