Apple Inc. (NASDAQ: AAPL) stock is facing resistance from its 20-day SMA, but AAPL stock may soon resume its uptrend.
Shares of Cupertino, California-based tech behemoth Apple (NASDAQ:AAPL) have mostly moved sideways in the last few trading days. AAPL stock gains are almost flat in the last one month and in fact, Apple stock is down by more than 2% in the month of April. Conservative AAPL stock investors might be tempted to sell some shares with bullish analyst commentary touching a euphoric pitch. Others might be enticed by Apple stock's near 22% YTD gains, to cash in. However, we think AAPL shares may be headed back to higher levels.
A lot is riding on Apple's iPhone 8, and the emergence of a few negative reports regarding some features of the upcoming model haven't done any good for the sentiment around Apple. However, we have always been bullish on the long-term prospects of the Cupertino giant and there are many factors which could drive AAPL stock even higher. With AAPL stock losing some momentum, now may be a good time to buy in, because Apple stock looks set for a near-term rebound. Let's take a closer look.
Increasing analyst euphoria surrounds Apple stock.
We saw some more analysts reiterating their bullish stance on AAPL stock this week. RBC analyst Amit Daryanani was the latest to hike his Apple stock 12-month price target. He increased his price target to $157 from $155 and reiterated an Outperform rating. Also, recently, Kulbinder Garcha of Credit Suisse raised his Apple price target $170 from $160. He was extremely bullish on Apple's fast-growing services segment. We also saw Mizuho Securities analysts restating their $150 price target and a Buy rating on AAPL stock. In fact, Apple stock's almost 22% YTD gains have also largely been driven by numerous analyst upgrades and price target hikes.
However, recently, there have been negative rumors regarding the upcoming iPhone 8's features, which have dampened the spirits of some investors. For those who were disappointed, there'a yet another rumor, which could somewhat rejuvenate the spirits of AAPL stock investors. A recent Wccftech post reports that according to the sources cited in the report, the sales forecast for upcoming models of iPhone is expected to range between 220-230 million units. This could mean Apple shipping more than 50 million units per quarter, which is remarkably high. These estimates are based on the chip demands for the upcoming iPhone models conveyed to the component suppliers. These numbers sound too good, and if the demand happens to be anywhere near to the above numbers, it could be a bonanza for AAPL stock investors.
AAPL stock facing resistance from 20-day SMA.
Recently, we saw Apple stock price falling below its technically important 20-day moving average line for the first time in 2017. Shares of Apple Inc have closed just below the 20-day SMA trendline in the following days since breaching it. The next support line for AAPL stock is the 50-day SMA line and the present AAPL stock price is not far away from it. Apple stock price is now facing resistance from its 20-day SMA which has acted as a good support for AAPL stock in the recent past. AAPL stock in the last 6 months has rebounded strongly on overcoming the resistance posed by its 20-day SMA.
A Few other technical indicators suggest Apple stock could rebound soon.
Coming to other technical indicators, let's first consider the Relative Strength Index (RSI) indicator. The RSI indicator is a popular indicator to identify overbought and oversold situations in a particular stock. The RSI threshold measures basically help us gauge in which direction the momentum is. If the RSI measure of a stock is above 70, then it is deemed overbought, while a reading below 30 suggests the stock is in an oversold condition. It is to be noted that different traders use their own thresholds of RSI measure to identify overbought and oversold conditions. After yesterday's close, the RSI measure for AAPL stock fell to 27.25, well below the standard oversold threshold RSI measure, indicating that AAPL stock is in oversold territory.
One other popular technical indicator, the Bollinger Bands also suggests that AAPL stock is almost in oversold condition. Bollinger Bands consists of three lines, the 21-day simple moving average center line and two lines above and below the center line, called the upper and lower band plotted two standard deviations from the center line in both directions. The two bands capture almost 90% of the price movement. If the stock price touches the upper band then the stock is considered to be overbought, whereas, a stock is deemed to be oversold if it touches the lower band. If one looks at the Apple Inc stock technical chart, AAPL stock price is extremely close to the lower band and any further weakness in AAPL stock would lead to the breaching of the lower Bollinger band.
The analyst euphoria and the hype of iPhone supercycle have driven Apple (NASDAQ:AAPL) stock to tremendous double-digit gains this year. The latest Apple stock short interest numbers showing a decrease of more than 12%, also indicate that the latest AAPL stock gains are here to stay. With earnings lined up shortly, AAPL stock could be in for exciting times. Some technicals giving bullish signals make things much more interesting for investors. With some analysts being so bullish that they expect AAPL stock to hit the $200 mark soon, it is a good time to be bullish on Apple stock in long-term. To buy into AAPL stock in near-term, one should closely follow the technicals before getting long.
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