How to Trade Apple as Reports Suggest Possible iPhone Delay

Here's what the charts look like now as Apple shares flirt with a move higher.
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Apple  (AAPL) - Get Report shares have been enjoying a sharp rebound over the past few trading sessions. In fact, much of the stock market has as well.

That’s even as Apple reportedly mulls delaying its 5G iPhone by one to two months. Remember, much of the gain in Apple stock came as the company recorded better-than-expected sales for its current iPhone lineup, devices that many investors simply considered as a bridge between the prior lineup and the 5G launch.

Apple even predicted that it may achieve 5G sales of 100 million units. Now, the company is worried that consumer demand is waning for smartphone upgrades as the coronavirus sweeps across the globe.

Wedbush analyst Daniel Ives even went as far to say that it’s “extremely unlikely” that Apple will launch a 5G iPhone in September or October. In fact, he puts just a 10% to 15% likelihood that Apple does launch during that timeframe.

Investors are taking the reports in stride, with the stock price up about 3% on Thursday, although it’s worth noting that the gain lags the 4.5% advance in the S&P 500. Let’s take a closer look at the charts.

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Trading Apple Stock

Daily chart of Apple stock.

Daily chart of Apple stock.

Nimble traders had a great opportunity in Apple stock when shares broke below $220 last week. That sent shares down to the $215 level, which was the breakout level from September.

Notice on the chart how this level went from resistance in May and July to support in October and March 2020. We’ve seen a quick $40 rally from that point, as shares reclaim $250 and the 200-day moving average.

There are other developments to take note of as well.

Apple shares have broken out of a steep downtrend, marked by a blue line on the chart. The Relative Strength Index (RSI), which measures how overbought or oversold a stock is, was able to breakout over downtrend resistance as well, (top of the chart, purple line). The MACD reading, which measures momentum, is also starting to turn in bulls’ favor (bottom of the chart, blue circle).

In short, the bulls have a lot of metrics and price action working in their favor. That being said, investors are definitely not out of the woods yet.

Apple stock could certainly weaken once more. All it would take is a deep crack in the S&P 500 and shares could come tumbling back down again. Below the 200-day moving average should signal caution for investors. A drop below $240 could put a gap-fill down to the $220s on the table.

On the upside, a move above $256.39 - the 38.2% retracement for the 2020 range - could trigger a move up to $270, roughly where Apple stock will hit the 50% retracement.