Why Apple’s recent decline may be just the beginning, according to the charts

The performance of the once-dominant Magnificent 7 stocks has certainly shifted in the first quarter, with charts like Apple (AAPL) beginning to diverge from the rest of the mega-cap growth leadership names. Apple is down just over 12% year-to-date, compared to the S & P 500 and Nasdaq 100, which both are up over 8% for the year. But is the recent decline for AAPL just the beginning? Since a strong rally in the first half of 2023, Apple has essentially been in a basing pattern. The stock has ranged between resistance around $197 and support in the $165-170 range. Note how the price peaks in July 2023 and December 2023 were marked by a decline in RSI, forming the classic “bearish momentum divergence” pattern of stronger prices on weaker momentum. The pullback in October of last year saw AAPL find support at an ascending 200-day moving average, which often serves as a floor in long-term uptrends. Just last month, Apple failed to hold this same 200-day moving average, which could be a sign of a broader rotation from a bullish phase to a bearish phase. It’s also worth noting that when AAPL retested the upper end of the range in January, the RSI stalled out right around 60. In a bearish phase, the entire range of the RSI will often shift lower, and short-term rallies will push the RSI only up to around 60 before the next down leg. This is exactly what we observed back in January, and gives further support to the idea that this recent downturn could be the beginning of something much more significant. Apple is now at a key decision point, having retraced about 38.2% of the 2023 uptrend, and also testing the price lows from September and October 2023. The RSI has moved into the oversold range as well, which tells me to expect at least some sort of bounce off this well-established level of price support. AAPL 6M mountain Apple, 6 months If AAPL fails to hold the October 2023 low, which we feel is a likely scenario, that could suggest further downside to the 61.8% retracement level around $152. Given the price deterioration and bearish momentum characteristics through this week, investors should be considering how to manage risk given the likelihood of further downside pressure. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.