​​​​Apple Stock Selloff: Has the Worst Passed?

​​​Steep Slide Erodes Market Value

​Apple’s stock has suffered its worst quarterly performance relative to the S&P 500 Index in over a decade, dropping 9% year-to-date. This steep slide has erased more than $300 billion in market value, causing Apple to cede its position as the most valuable US company to Microsoft. The decline was spurred by declining sales in China, regulatory scrutiny of its App store, and mounting concern among investors about its growth outlook.

​Short Sellers May Unwind Positions

​Short sellers pounced on Apple as peers like Nvidia, Meta, and Amazon kept rallying. Apple is the second-most profitable short position this year at $2.4 billion in paper profits, according to data-analytics firm S3 Partners. That may give them some incentive to unwind the positions, potentially providing some upside for the stock.

​Strong Fundamentals and Safe-Haven Appeal

​Despite the challenges, Apple's strong cash flows, buybacks, and reputation as a safe-haven stock suggest the downside may be limited from current levels. The company's massive buyback plans mean its shares continue to have upside potential for long-term money managers.

​Potential Rotation from Frothy Tech Names

​If the AI-driven tech rally fades, some traders expect a rotation back into Apple from frothier tech names like Nvidia. While anxiety is building over how long the artificial intelligence euphoria can last following Nvidia's over 80% surge in 2024, Apple shouldn't be a drag on the S&P 500 unless it breaks its multi-year uptrend from its 2020 lows.

​Apple analyst ratings

​Fundamental analysts are rating Apple as between a ‘buy’ with LSEG data showing 9 strong buy, 17 buy, 13 hold, and 2 sell - with the mean of estimates suggesting a long-term price target of $200 for the share, roughly 18% above the share’s current price (as of 3 April 2024).

​Technical analysis on the Apple share price

​The Apple share price topped out in December of last year, having already done so in July, and has been coming off its $196.38 late-January high over the past few months with it slipping towards its October 2023 low at $165.67.

​The October low is technically key as a fall through it would form a long-term double top formation which could lead to the 200-week simple moving average (SMA) at $151.21 being reached in the course of this year.

​Apple Weekly Candlestick Chart

​The risk of such a decline unfolding will remain in play while the January lows and 55-week SMA at $179.25 to $180.39 thwart any upside bounce. In mid-March this key resistance zone already capped the upside and failure there provoked the current descent with the March low at $168.49 being revisited.

​Apple Daily Candlestick Chart

​A fall through and daily chart close below the $168.49 March low would engage the October 2023 low at $165.67 below which would then beckon the minor psychological $150 region.

​​Resistance can be seen at last Wednesday’s $173.60 reaction high and along this year’s downtrend line at $174.80. While no rise above $173.60 is seen, downside pressure should prevail.