Apple Could Test All-Time High In December

Dow component Apple Inc. (AAPL) posted an all-time high at 137.98 in September and eased into a correction that unfolded through a symmetrical triangle pattern. Buying pressure is now picking up, raising odds the tech superstar will test, and possibly break, range resistance prior to year’s end.  A trio of benign forces should underpin this uptick, with positive seasonality, vaccine distribution, and the surging Nasdaq-100 index encouraging investors to come off the sidelines.

December ‘Window Dressing’

The Nasdaq-100 has now reached within 100 points of the September high, stoking buying pressure throughout the tech universe. This is great news because 2020’s top performers, including the famed FAANG quintet, have underperformed so far in the fourth quarter, with capital rotating into 2021 recovery plays. However, market leaders often end the year at their highs because funds buy shares in December to ‘dress up’ annual reports to investors.

Apple news flow has been quiet in the last month or so, characterized by a Loop Capital upgrade, App store developments, and a few product and partnership announcements. Everyone is waiting on iPhone 12 sales statistics but CEO Tim Cook is unlikely to provide metrics until the end of the 2020 holiday season. This news vacuum can be good news for investors because it fosters speculation on sales strength without the threat of a sudden reality check.

Wall Street And Technical Outlook

Wall Street consensus has grown more cautious in recent months due to Apple’s 68% year-to-date return, with a ‘Moderate Buy’ rating based upon 23 ‘Buy’, 6 ‘Hold’, and 1 ‘Sell’ recommendation.  Price targets currently range from a low of $75 to a Street-high $150 while the stock is now trading about $7 below the median $129 target. Share gains should be relatively easy to achieve into year’s end, given this humble placement.

The stock broke out above the February 2020 high at a split-adjusted 81.22 in June, entering a powerful trend advance that added more than 50 points into the September high. It sold off to 103 a few weeks later, setting the boundaries of a symmetrical triangle that should resolve to the upside. Price action posted the first higher high in this pattern in the first hour of Tuesday’s session, raising odds for a triangle breakout and test of the rally high.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.