Apple Turnaround

There has been a lot of talk of the decline of Apple's share price from its $706 high back in September. We have seen increased speculation that large fund managers have been reducing their exposure to the stock as it continues to lag behind the rest of the equity markets. However I think that we might be seeing the formation of a bottom. Let me explain this;

We can see the fall of the stock from its peak at $706 to its low of $387, the down trend over this period is obvious to the naked eye and it was a great trading opportunity for shorting the stock adopting the 'Selling any rally' mentality. What has caught my eye over the last few months is the H&S reversal formation that is forming. This can be seen graphically by the points A-B-C. As we all know this is one of the most respected reversal formations, and it could signal the bottom of the stock if we see a move from point C to point D.

However there is a slight case for concern, we have seen the significant rally in global equity markets and Apple has failed to take part in this significant move. We have the Dow & SPX making new historic highs while Apple is a long way off this mark. It is interesting to note that Apple has become uncorrelated to the SPX and I think this trend might continue over the next months.

Apple has always been a strong performing stock and it has generated significant returns for investors, a large portion of these investors have opted to lock in some profit, and rotate money into alternative sectors in search of gains. I believe that when the market does begin to correct over the coming weeks, months we will see money move back into Apple. The second half of the year will be characterised by new Apple products and services that will inevitably stimulate consumer and investor confidence and should help to see a significant move to the upside in the stock price.

Apple in my opinion could be the new VIX....

Happy Trading
@lowkeycapital