Despite being a momentum giant and the world's largest company, Apple has not performed as well as AT&T. Here's why.
When a stock is removed from the Dow 30 the new stock will rebound until the replacement is made. This is caused by equity money managers who are benchmarked to the Dow 30. The stock being removed trades lower on sales by money managers and the stock going in moves higher as money manages buy the pending new member. This process ends when the change takes place.
Once the dust settles, the old Dow 30 component tends to outperform the new member for a period of time, and we are in this period now for AT&T.
Here's the daily chart for Apple.
Courtesy of MetaStock Xenith
Apple had a close of $127.42 on Tuesday, down 0.8% since joining the Dow 30 at the close of $128.47 on March 18. On Wednesday the stock quickly popped above its 50-day simple moving average of $128.11. The stock is well above its 200-day simple moving average of $116.16. Since March 18 Apple set an all-time intraday high of $134.54 on April 28 and was 5.3% below that level at Tuesday's close.
Here's the weekly chart for Apple.