Apple shares have been a safe haven for most of the year in a sea of stalled tech names, but its chart is now signaling weakness that could have implications for the wider market. The company’s exposure to China has become the Achilles heel of a stock that has held up as other big names, like Alphabet and Microsoft, lost support and hit new lows for the company. year. Apple stock fell more than 2% on Tuesday, after falling on Monday and Friday. The stock is down about $10 since Thursday’s close. Late last week, the stock fell on concerns over an employee walkout and protests against Apple supplier Foxconn over a pay dispute. Covid lockdowns in China and protests across the country have also dampened sentiment about Apple. “The news from China has started to raise concerns about whether it could impact iPhone production,” said Scott Redler, chief strategic officer of T3Live.com. “Now Apple is more of a headwind to the market than a constructive name. If this isn’t rectified soon, it will be difficult for any type of Santa Claus gathering in the coming weeks.” Apple’s large weighting is 6.5% of the S&P 500 market capitalization, and technical analysts say this has implications for the wider market, both in terms of price impact and sentiment. . The S&P 500 was trading lower on Tuesday afternoon. “The [Apple] the chart is toppy and deteriorating like many of its peers did earlier this year, and Apple is the holdout,” said Todd Sohn, technical strategist at Strategas. “If the situation in China gets worse, it will reflect what the graph shows. Evercore ISI analysts said the Zhengzhou protests and Foxconn walkout could impact Apple’s revenue. In a note released on Monday, analysts said iPhone demand could be hit by 5-8 million units in the December quarter Technical analysts are watching several key points on the Apple chart, and note that the stock has now traded below its 50-day moving average for a second day This level was $145.97 on Tuesday. The 50-day is the average of the last 50 closes and is considered “A momentum indicator. The S&P 500 was trading lower but was still well above its 50-day moving average. Apple was fluctuating around the $141 level in afternoon trading. Key Levels to Watch “Apple broke through the $147 zone on Friday, coinciding with the time the S&P broke below 4,000, and it’s been a headwind ever since,” Redler said. His next target is $134, then $127. “If that happens, the market goes down a lot. We want him to stay here, or Santa’s rally becomes less and less likely.” Katie Stockton, founder of Fairlead Strategies, said she has been watching Apple closely and has been underperforming since September, after outperforming from June through the summer. “For two months we have seen a series of lower highs against the S&P. The latest underperformance since September has made investors nervous,” she said. “I think that’s the message. Apple is 6.5% of the S&P. I would say it’s remarkable how strong the S&P 500 is today with Apple down 2%. It shows that the magnitude is not bad.” Stockton said the next major support she is watching is this chart point of $127, where the stock consolidated from late 2020 to mid-2021. It is also close to the Fibonacci retracement level. Before that, there is a minor support level at $137. “For the weighting it has and its influence on sentiment, if it falls below $137, that would be negative for the overall market,” Stockton said. “I can’t imagine that happening without getting a sell signal on the S&P chart.” She said the S&P 500 chart has been holding a buy signal in place for several weeks. Stockton said it’s hard to have any conviction on Apple, and she expects the stock to eventually hit the $127 level. “Regardless of what happens in the short term, we think that level will be tested,” she said. Loop reiterated its buy on the stock on Tuesday, noting that concerns about overly high earnings estimates are overblown. The company says some of the concerns are already in the stock and that there is “opportunity for commensurate revenue and EPS growth” beginning in the September 2023 quarter. — CNBC’s Arjun Kharpal and Michael Bloom contributed to this report.
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