Shares of Apple (AAPL) - Get Report have been consolidating for the last two weeks. The stock's powerful rally off the Sept. 12 spike low ran out of steam after reaching the $116 area five days later. This healthy action will likely continue in the near term and with it will bring much lower entry opportunities for Apple bulls.
Apple's surge off this month's low began with a gap lower open on Sept. 12. The stock dipped down to within pennies of its 200-day moving average. By the close, Apple was up 2.25% for the day, a rebound that carried quite bit of upside momentum with it. This surge drove shares past multiple layers of supply, including the August high and the initial 2016 peak set back in April. By the early going on Sept. 16, Apple was up over 12% and had run out of steam.
A healthy pullback has been developing nicely. In the near term, it will likely carry shares lower before the stock can regain its footing. As this plays out, patient Apple investors should keep a close eye on the $110-to-$108 area. This two-dollar area is a very solid support zone and includes the August high as well as the 50-day moving average. A dip down to this zone on continued light downside trade will provide a low-risk entry opportunity. Until then, Apple may prove to be a frustrating long.
If anything can be learned from Samsung's latest high- profile scandal -- which we discussed in a comprehensive case-study published Monday -- Apple fights competition quietly and surgically, stripping emotion out of the equation. The company has prioritized patience over rush-to-market in order to ensure that once it launches a new product or feature, it does so knowing that its capability is superior to its competitor (Samsung on the high-end and no one else). Management's lack of desperation -- and proper sense of security amidst constant innovation -- allows the company to play for the long term, using incremental share gains in the smartphone market to fuel the flywheel effect that is their Services businesses.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.