Benzinga: Apple is oversold

From Melanie Schaffer’s “Apple Pulls Back From All-Time High, But May Be Set To Climb Heading Into Earnings, Fed Meeting” posted Tuesday:

After dropping to the $155 level on Monday, Apple bounced up over 4% to close the trading day at $162.30. The wide trading range makes the possibility of sideways trading between Monday’s range the most likely scenario for Tuesday.

Due to the large drop in Apple from its Jan. 4 all-time high of $182.94, the stock is trading in a confirmed downtrend on the daily chart. In order to reverse into an uptrend on the larger timeframes, Apple will need to confirm an uptrend on the four-hour chart. Currently, the largest timeframe that has demonstrated a reversal to the upside is on the hourly chart.

A larger bounce will eventually come because Apple’s relative strength index (RSI) is measuring in at about 31%. When a stock’s RSI reaches the 30% level, it becomes oversold, which can be a buy signal for technical traders. The last time Apple’s RSI measured in near 30% was on March 8, 2021 and the stock rallied almost 15% over the month that followed.

Apple is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is trading above the 200-day simple moving average, however, which indicates long-term sentiment is bullish.

My take: As I write this Apple is trading in the high $150s and its RSI is above 34.

7 Comments

  1. Adam Foster said:
    I guess my Limit Order at 155 today won’t fill…

    0
    January 25, 2022
    • Robert Douglass said:
      @Adam
      Yeah, I tried something like that too, earlier this morning… no luck. So I tried again at 157.60 and succeeded in picking up a couple hundred more shares 🙂 at 11:30am.
      The next few days will tell if this is brilliant thinking, or a fools journey.
      My only macro fear is TSMC is very vulnerable if the Chinese invade Taiwan… (TSMC makes all the M1 chips).

      2
      January 25, 2022
      • John Konopka said:
        I don’t know what to think about China. Sure, on the surface China is very irritated about Taiwan. However, an invasion or other military action would lead to massive unemployment in China which would be a much bigger problem for the government. My guess is they will play the long game and continue to saber rattle and make claims to ownership of Taiwan without killing the goose laying the golden eggs.

        3
        January 25, 2022
  2. Robert Paul Leitao said:
    I buy equities based on fundamentals, not “technical analysis” and other mumbo jumbo.

    Does Apple remain a growth story? Yes
    Is the dividend rising annually? Yes
    Does the massive share repurchase program remain in place? Yes
    Is it likely new products and services will be announced within a year? Yes
    Is the global user base growing? Yes
    Are the shares attractive at the current price? Yes.
    I’m done. My approach is much easier to follow.

    7
    January 25, 2022
    • Jacob Feenstra said:
      I’m totally with you Robert. Technicalities will explain stock movements in ebb and flow situations, but in the end it’s the fundamentals that determine what waters AAPL will sail. In my opinion the stock was oversold already at $180, let alone at $160.

      2
      January 25, 2022
    • David Emery said:
      “Technical” analysis is an attempt to mathematically model human behavior. “nuff said.

      2
      January 25, 2022
  3. John Konopka said:
    I’m now worried more about Russia invading Ukraine. That could lead to no end of troubles.

    I suspect the entire market will go down a lot, at least for a while, if there is an invasion by Russia.

    0
    January 25, 2022

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