Skip to main content

Is Apple Stock Getting Too Hot Again? Check the Charts

Apple stock is up more than 80% from its March lows. Has the rally gone on too long? The charts provide clues.

Apple  (AAPL) - Get Free Report stock has been on fire, and that may be putting matters lightly. At this week’s high, the Cupertino, Calif., tech giant's stock was up 82% from the March lows.

While much of tech has made a large move higher, the move in megacap tech has been stunning. Microsoft  (MSFT) - Get Free Report and Amazon  (AMZN) - Get Free Report are other trillion-dollar market-cap stocks that have set records lately.

But at some point we have to ask: Has the rally gone a bit too far, too fast? I last turned cautious on Apple on Feb. 10.

Of course, I wasn’t looking for a 40% plunge in a matter of weeks, but rather I was highlighting that the evidence for a pullback was starting to mount. 

Is it again?

Apple, Microsoft and Amazon are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL, MSFT or AMZN? Learn more now.

Trading Apple Stock

Daily chart of Apple stock.

Daily chart of Apple stock.

Just to highlight some of this move, Apple stock hasn’t touched its 10-week moving average in almost three months. The stock hasn’t touched its 20-day moving average since April 6, more than three months ago.

While eight consecutive sessions without a test of the 10-day moving average isn’t crazy, this long of a stretch does suggest the run is getting a bit extended in the short term.

In February, we had clues of waning momentum. Here, the momentum is certainly not waning, at least not yet, and the stock isn’t exactly overbought.

Thursday’s candle did appear a bit toppy, but unless we see downside follow-through, it’s hard to get overly bearish despite this massive move. 

Of course, we have to take the overall market into consideration, particularly as coronavirus cases continue to surge.

On a dip, I first want to see how the $370 area holds up. Admittedly, it’s close to the current price, but near this level, Apple stock finds the 10-day moving average, the 138.2% extension and uptrend support (blue line).

Below puts the 20-day moving average in play near $362, followed by the $350 mark.

Because we can’t get too bearish, we must also consider the upside as well. 

If Apple stock can clear this week’s high, it puts the 161.8% extension in play at $396.97, followed by a potential test of $400.