Apple Pulls Back From All-Time High, But May Be Set To Climb Heading Into Earnings, Fed Meeting

Apple, Inc AAPL completed a measured move on a breakdown of a bearish head-and-shoulders pattern which Benzinga called out on Jan. 18. The stock fell about 8% in total between Thursday and Monday to hit the $155 level, as Benzinga had predicted.

On Thursday, Apple will report its first-quarter 2022 earnings results, and at least two analysts have very different opinions on how the tech giant will perform.

Wedbush analyst Daniel Ives believes Apple will beat the Streets $118.3 billion revenue and $1.88 earnings per share estimates and referred to the company as a “safety blanket” in the current landscape of market turmoil. Wedbush has a 12-month price target of $200 for the stock.

In contrast, Goldman Sachs analyst Rod Hall is bearish on Apple and maintained the firm’s $142 price target, which suggests a 12% downside. Hall noted that data suggests Apple saw slower sales during the month of December.

Whether the large reversal in Apple’s stock on Monday indicates at least the temporary bottom has yet to be determined. The move will require eventual consolidation, which may set up an inside bar pattern on Tuesday and possibly Wednesday, as the market awaits the minutes from the Federal Reserve’s January meeting.

See Also: Here's Why Apple Is Liable To Pay Regulatory Fine Of €5M

The Apple Chart: 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.

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• Bulls want to see sideways consolidation going into the Fed meeting and then for big bullish volume to come in and push the stock up above Monday’s high-of-day. There is resistance above at $162.14 and $167.88.
• Bears want to see big bearish volume come in and drop Apple down below Monday’s low-of-day, which will confirm the downtrend is still intact. There is support below at $157.26 and $154.39.
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