Is It Finally Time to Buy Apple Stock?

Apple stock continues to lag, as investors wonder if the current dip is one to avoid or one to buy. To answer that question: It depends on your time frame.
Author:
Publish date:

As is often the case, investors have been looking for Apple  (AAPL) - Get Report to take leadership amid the current rout in tech stocks.

However, the Cupertino, Calif., tech titan has yet to find its footing, with its shares continuing to slip.

To be fair, it’s not getting hit like high-growth tech stocks have been. Still, as investors look for stability, they’re looking at the largest name in the market.

For months — particularly in the fourth quarter and through the first half of Q1 — FAANG stocks like Apple, Amazon  (AMZN) - Get Report and Facebook  (FB) - Get Report have traded sideways, consolidating the large gains from the second quarter of 2020.

Despite robust earnings results — where Apple reported revenue $8 billion ahead of expectations — the stock still couldn’t get going.

I was bullish on the post-earnings dip, provided support held up. It didn’t and it was a red flag, as the shares went on to retreat. Is it finally time to buy?

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

Trading Apple Stock

Daily chart of Apple stock.

Daily chart of Apple stock.

A look at the chart shows that sellers still remain in control. I know that’s not what investors want to hear, but the technicals are clear.

The 10-day, 21-day and 50-day moving averages have all turned lower and Apple is below all three of them, as well as the 100-day moving average.

Further, the 10-day moving average is acting as resistance. It rejected Apple last week, leading to a brief weekly-down rotation this week. For now, it’s resistance again on Wednesday.

On the upside, the 10-day moving average is the short-term line in the sand. While sellers may be in control, that doesn’t have to last.

If Apple can reclaim this mark, it quickly opens up the $124.50 to $126.75 range. In that area, the stock finds its 100-day and 21-day moving averages, the 61.8% retracement and prior support from January that turned to resistance in March.

Above this zone puts $130 and the 50-day moving average in play, followed a possible move back to $138. When Apple gets moving, it can really rally in a hurry.

On the downside, the outlook is pretty clear. Keep an eye on this week’s low at $116.21 and the 200-day moving average. Below puts the 50-week moving average in play.

So how do we answer the question, “is Apple stock finally a buy?”

For long-term investors, I would feel comfortable buying this dip, particularly if we see Apple down 20% from the highs and at the 200-day moving average.

For short-term traders, Apple is less attractive on the long side unless it can reclaim the 10-day moving average or dips further below current levels.