Why you should watch market leader Apple for the future direction of the S&P 500
Apple, Inc AAPL gained 2.7% to start the trading day Friday after receiving positive reaction to its third quarter financial results.
The most notable indicator for technical analysts is that the tech giant started the trading day above the 200-day simple moving average (SMA). Had Apple opened the trading session below this level, the zone would have acted as strong resistance, but as the mega-cap stock opened above the zone, the 200 days will now likely act as a resistance. major support.
Apple has been unable to trade above the 200-day SMA since May 5 and on June 2 the 50-day SMA fell below 200 days, which officially plunged the stock into a bearish cycle. Considering that Apple is the most weighted stock within the S&P 500, weighted at 6.2% of the index's total holdings, it's surprising that Apple's stock price acted as an indicator delayed.
Now, with Apple being one of the first big tech stocks to regain its 200-day SMA, while the S&P 500 is still trading below the level on the daily timeframe, traders and investors feel mixed about the direction the general markets are heading.
Just because Apple lagged the market during its general downturn doesn't mean the stock can't signal the future general direction of the market. The fact that the market leader has regained the 200-day SMA is a positive sign.
Apple's chart looks set for a pullback, however, and traders and investors will be watching to see if the stock can maintain the 200-day SMA when the retracement takes place.
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The Apple Chart: Apple reversed its strong and consistent uptrend on June 16 and posted its latest low on July 26 at $150.80. The most recent confirmed high was formed at $156.28 on July 22nd and although the stock recently climbed above this level, the stock did not print a reversal candlestick. However, the return to the downside is likely to happen soon, as Apple's Relative Strength Index (RSI) sits at 70%. When a stock's RSI reaches or trades above this level, it becomes overbought, which can be a sell signal for technical traders. The 200-day SMA is directly crossing the middle of a lower gap, which exists between $157.64 and $159.50. Apple is likely to drop 90% to fill this empty trading range going forward and if that happens on Monday traders will want to see the gap quickly closed and then Apple close the trading day above of 200 days. . If Apple closes a trading day below 200 days, the area will act as strong resistance and could signal that a bigger pullback in general markets is on the horizon. Apple has upper resistance at $167.88 and $171.03 and lower support at $162.14 and $157.26.
See also: This Burrito chain has a better 5-year return than Apple, Nvidia, Microsoft, Ford, Starbucks, Disney and Amazon
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Apple, Inc AAPL gained 2.7% to start the trading day Friday after receiving positive reaction to its third quarter financial results.
The most notable indicator for technical analysts is that the tech giant started the trading day above the 200-day simple moving average (SMA). Had Apple opened the trading session below this level, the zone would have acted as strong resistance, but as the mega-cap stock opened above the zone, the 200 days will now likely act as a resistance. major support.
Apple has been unable to trade above the 200-day SMA since May 5 and on June 2 the 50-day SMA fell below 200 days, which officially plunged the stock into a bearish cycle. Considering that Apple is the most weighted stock within the S&P 500, weighted at 6.2% of the index's total holdings, it's surprising that Apple's stock price acted as an indicator delayed.
Now, with Apple being one of the first big tech stocks to regain its 200-day SMA, while the S&P 500 is still trading below the level on the daily timeframe, traders and investors feel mixed about the direction the general markets are heading.
Just because Apple lagged the market during its general downturn doesn't mean the stock can't signal the future general direction of the market. The fact that the market leader has regained the 200-day SMA is a positive sign.
Apple's chart looks set for a pullback, however, and traders and investors will be watching to see if the stock can maintain the 200-day SMA when the retracement takes place.
Want direct analysis? Meet me in the BZ Pro lounge! Click here for a free trial.
The Apple Chart: Apple reversed its strong and consistent uptrend on June 16 and posted its latest low on July 26 at $150.80. The most recent confirmed high was formed at $156.28 on July 22nd and although the stock recently climbed above this level, the stock did not print a reversal candlestick. However, the return to the downside is likely to happen soon, as Apple's Relative Strength Index (RSI) sits at 70%. When a stock's RSI reaches or trades above this level, it becomes overbought, which can be a sell signal for technical traders. The 200-day SMA is directly crossing the middle of a lower gap, which exists between $157.64 and $159.50. Apple is likely to drop 90% to fill this empty trading range going forward and if that happens on Monday traders will want to see the gap quickly closed and then Apple close the trading day above of 200 days. . If Apple closes a trading day below 200 days, the area will act as strong resistance and could signal that a bigger pullback in general markets is on the horizon. Apple has upper resistance at $167.88 and $171.03 and lower support at $162.14 and $157.26.
See also: This Burrito chain has a better 5-year return than Apple, Nvidia, Microsoft, Ford, Starbucks, Disney and Amazon
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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