APPLE's fall, pullback or long term trend ?
It happened.
On Tue, 05 Mar 2024 — traders are eyeing $Apple(AAPL)$ after its stock slid below a critical psychological threshold, as shares entered a technical correction for the first time since August 2023 this month. (see below)
Expert’s analysis.
According to Strategas Securities, MD of ETF and technical strategy’s Todd Sohn:
Apple failed to hold the $180 support level last week. (see below)
Traded for less than $170 at various points during Tue, 05 Mar 2024’s session.
Breaking through that level and holding there could presage a pullback to its October low of $165.67.
That being said, Apple is still one of the most influential stocks.
So, it may see a bounce from here in the short-run after being oversold.
But, traders may still look to fade it at $180 because its trend has deteriorated much.
AAPL’s YTD.
Shares of the Cupertino, California-based company have shed nearly -12% in 2024 alone, after closing at a record in December and in the process, erasing more than $300 Billion in market value. (see below)
That’s cost Apple its crown as the most valuable US company to $Microsoft(MSFT)$.
It does not help too as some of its Big Tech peers like $NVIDIA Corp(NVDA)$, $Meta Platforms, Inc.(META)$ and Amazon Inc (AMZN) keep rallying.
Apple Inc - YTD performance
Truth be told, of late — Apple is facing a slew of issues:
Regulatory scrutiny of its App Store.
Declining sales in China.
Investor concerns over its growth prospects.
Apple’s fourth-quarter outlook also raised worries due to tepid demand for its handsets and other gadgets.
Short sellers’ profit bets.
Naturally, short sellers pounced.
According to S3 Partners (a data analytic firm), Apple was the the stock market’s second-most profitable short position in February at $606 million in paper profits. (see above)
What else?
With Apple faltering, there is growing concerns amongst traders that technology shares (broadly) may face pressure in the coming months, even with Nvidia’s dominance.
The iPhone maker continues to set new lows relative to the $252 Billion - $Invesco QQQ Trust-ETF(QQQ)$ that tracks the Nasdaq 100 Index.
According to Birinyi Associates, Director of Research — Jeff Rubin, Apple’s correlation to the S&P 500 is not as tight as some may think.
On a scale where “1” means a perfect directional relationship and “0” indicates no relationship at all:
Apple clocks in at 0.65.
Nvidia came in at 0.69.
For the average S&P stock, it is about 0.36.
Good news?
According to Fundstrat Global Advisor, Head of technical strategy’s Mark Newton:
What the above means (from a technical perspective), is US stock market can continue to churn higher
As long as Apple’s stock does not break its multi-year uptrend from its 2020 lows.
While this is not an intermediate-term concern, and there’s ample evidence that ‘Magnificent 7’ stocks can certainly carry markets higher without the aid of Apple.
In his note to clients, Newton wrote — “I view all weakness in Apple over the next month as likely making this stock quite attractive.”
My viewpoints: (mine & mine only)
1) Negative US market sentiments.
With a “nervous” US market in the lead up to (a) Mr Powell’s 2 days meeting with the US house of representatives and Senate, and (b) Friday’s US Non-farm payroll report — things took a tumble.
Some tech giants fell (not just Apple per se) as investors decided to take profits while looking out, carefully assessing how Mr Powell is going to navigate his way out in this annual event.
2) $2 Billion Fine.
It did not help that Apple was fined nearly $1.95 Billion for breaking European Union (EU) antitrust rules.
This is EU’s first ever antitrust fine on Apple, with the commission ruling Apple restricted other streaming services from informing users of cheaper streaming options outside of Apple’s app store.
Apple retorted the decision saying the commission reached its landmark fine despite “its failure to uncover any credible evidence of consumer harm.”
3) Falling sales in China.
Prior to EU’s fine was another negative report of falling iPhone sales in China.
According to the press, iPhone sales fell -24% YoY in the first 6 weeks of 2024. In contrast, Huawei saw unit sales rise by +64% in the same period.
Is it numbers playing tricks on us ?
Honestly objective reporting should be about the number of units of mobile phone sold instead of percentages - no?
It cannot be deny that China accounts for about 20% of Apple’s sales total. (see above)
What the news article has failed to report too is that China is (a) a greying society and (b) it is no longer the world’s most populous country.
Like it or not, eventually demand for Apple’s products will tamper - it is a matter of time.
4) Emerging India’s rising sales.
Interestingly, in every news article on Apple’s iPhone falling sale in China - there is no mention of growing sales of Apple’s iPhones and peripherals in India.
This is what I meant by bias reporting. (see above).
To have a “complete” view, it is better to read widely and arrive at an unbiased, objective view by oneself.
Depending solely on “directional” reporting by news media could be “lop-sided” and bias.
India incidentally is the world’s most populous country.
With a healthy fertility rate, its poised to remain at pole position, for a long time to come.
In February 2024, Apple India crossed the significant sales milestone of $8 Billion (INR 66,000 Cr).
This marks the 2nd consecutive year in which the iPhone maker has experienced sales growth exceeding 40%, according to a report by ET.
Apple significantly boosted its market share in India from below 2% in FY18 to 6% by end March 2023.
Apple has moved a part of its production out of China to India, largely led by the Centre’s attractive production-linked-incentives (PLIs) for manufacturers in the country.
Last but not least, Apple will start manufacturing AirPods at the Hyderabad Foxconn unit in December 2024.
Question to ask - Will India eventually replace China and contribute > 20% to Apple’s total sales and becomes Apple’s core Manufacturing Hub at the same time?
5) Artificial Intelligence (AI) Socialization.
If there is anything that Apple is not “doing right” is jumping onto the AI bandwagon now.
Firstly, all chatbot companies are hogging the limelight eg. OpenAI, Gemini (formerly Bard) and Anthropic. It’s the catalyst that kickstarted the crazy AI-fever no?
Then comes the semiconductor-related companies (Nvidia, AMD, Intel, Arm, ASML, TSM etc…) with their AI-chips that aids AI-acceleration.
With the technology and available-component, next it’s about use-case or usability. This is where Microsoft comes into full view.
At the end of the day, AI needs to be infused into daily usable, in order for its benefits to be fully reaped.
Even Meta Platform have marketed AI on its various social-media platform (Facebook, Instagram etc…).
Amidst all these AI-related frenzy that’s driving Nasdaq to a dizzy high, where is Apple’s participation and role?
To have CEO, Tim Cook disclosed that Apple’s AI master plan will all be revealed by year end seems like a dampener. (see above)
It definitely speaks volume on the perception or lack of, where Apple is concerned.
Apple “likes” to build products in “shrouded secrecy” before the big reveal. Is the approach “relevant” in the 21st century? Seems passé to me!
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My opinion is apple still the future technology, but they didn’t put the future at the right time.
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