Rally or not? Apple stock is at a ‘key technical juncture’

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AAPL stock
Should you be excited about Apple stock? This chart could tell you.
Image: CNBC

Apple shares increased 2% on Monday, buoyed by the news that the burgeoning trade war between China and the U.S. could be over.

In all, AAPL is up almost 30% for the year. But according to an equity strategist, what happens next could be crucially important. It’s either very good news for Apple, or very bad.

“It’s at a key technical juncture right now,” Matt Maley, equity strategist at Miller Tabak, told CNBC. “At least on an intermediate-term basis, because this huge rally it’s seen this year, especially the most recent one, which is about 16% in just one month, has taken it right up to the upper line of what’s called a symmetrical triangle pattern on a multi-year basis. If it can break above that it’s going to be bullish for the stock.”

If that sounds like a headache-inducing bit of financial jargon, consider this: In early May, Apple hit a high of around $212. If it can rally 4% from its current level it will hit the upper band of the symmetrical triangle pattern Maley refers to. However, if it then breaks back down again it will be indicative of a failed rally.

Experts have long noted that symmetrical triangles are very useful in predicting where a stock goes. Symmetrical triangles occur when a stock consolidates in a way that creates two converging trend lines with similar slopes.Most of the time, a triangle indicates a continuation pattern for stock. Sometimes, however, it can mark a reversal in fortunes.

“The problem is when you’re at key technical junctures the thing can fail when you hit a resistance and it rolls back over,” Maley said. “If that happens we’ve got a big problem.”

A turbulent year

Apple has had a very mixed year in terms of its stock price, with both massive highs and lows. The company hit $1 trillion last summer. But this was followed by a crash later in the year. Since then, Apple has been recipient of both a “death cross” and a “golden cross.

At time of writing, Apple has a market cap of $927.3 billion. While it’s still raking in money hand over fist, growth has slowed. According to FactSet estimates, Apple will post negative earnings growth in its second, third, and fourth quarters. Analysts expect Apple’s earnings to contract by 4% in fiscal 2019.

Apple will reveal its next quarterly earnings on Tuesday, July 30, 2019.

Source: CNBC