Apple Inc. (AAPLThe stock rebounded within four points on Tuesday from its all-time high in September, raising hopes of a year-end breakout that pushed the Dow component to $ 150. Optimism about the tech icon’s “secret” plans to develop one self-driving car drove the rally, but the proceeds from that endeavor will not go online for at least a few years. As a result, Santa Claus looks like the real explanation, with this bullish seasonality going online this week.
The central theses
The stock entered a trading range just two days after the four-on-one game on August 31 Stock split and worked extremely overbought technical readings by time rather than price. The pattern has made three higher lows over the period and achieved picture-perfect consolidation that has generated little or no profit-taking. Even so, Seasonality will go bearish in less than two weeks, with the possibility of capital gain Selling pressure limits the upward trend.
Apple has posted a phenomenal 79% return since the start of the year, making it a prime candidate for a January sell-off. In theory at least, investors hold onto their biggest winners until the end of the year in order to postpone liability for capital gains until the new tax year. The subsequent decline can be intense but short-lived, with money released spilling into new games. This phenomenon, known as the January Effect, doesn’t happen every year. So we just have to wait and see what 2021 has in store.
Wall Street’s consensus on Apple stock has deteriorated since the second quarter, with historic price gains lowering expectations. Apple is now rated as a “Moderate Buy” based on 23 “Buy”, 6 “Hold” and 1 “Sell”. Price targets Currently, they range from a low of just $ 75 to a street high of $ 160, with the stock set to open Wednesday’s session just above the median of $ 132. With this supportive placement, a new headline could easily be published at the end of the year.
A Santa Claus rally describes a sustained rise in the stock market in the last week of December during the first two trading days in January. There are numerous explanations for the causes of a Santa Claus rally, including tax considerations, a general sense of optimism and happiness on Wall Street, and spending vacation money.
Apple Daily Chart (2018-2020)
A strong uptrend hit one split-adjusted $ 58.37 in October 2018, giving way to a sharp drop support at a 52-week low in December. The price action completed a round trip to the previous high in October 2019 and resulted in an immediate breakout that hit the low $ 80 in February 2020. The stock sold nearly 30 points through March, tested breakout support, and closed a 100% retracement on the high of the first quarter in June.
The subsequent breakout attracted momentum buyers, bringing Apple more than 50 points to its all-time high in September at $ 137.98. It fell more than 25% over the next three weeks, shaking out weak buyers who bought the split in hopes of easy gains. The price movement has now been between this high and low for more than three months, while the Total volume The accumulation distribution indicator (OBV) is dragging sideways, showing little or no selling pressure.
This is great preparation for a breakout and uptrend, but the timing is uncertain as the monthly stochastic oscillator There is still a sales cycle flashing, indicating that additional price action may be required for a sustained uptrend. Along with the page turning the calendar into January, investors may want to take it lightly to avoid buying too close to the range resistancethat can trigger a reversal at any time.
Seasonality is a characteristic of a time series in which the data undergoes regular and predictable changes that are repeated every calendar year. Any foreseeable fluctuation or pattern that repeats or repeats over a period of a year is said to be seasonal.
The bottom line
Apple stock tests resistance in September and could break out in the coming weeks.
Disclosure: The author held no positions in any of the above securities at the time of publication.