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Alan Farley
Apple

Dow component Apple Inc. (AAPL) slumped near a 4-week low as trading resumed in the United States on Tuesday, continuing a decline that started just two sessions after the tech giant posted a 4-for-1 split on Aug. 31. The stock hit an all-time high at 137.98 and turned sharply lower on Wednesday, relinquishing nearly 30 points into Friday’s intraday low at 110.89. It’s still testing that level, which has narrowly aligned with the 50-day moving average.

Goldman Sachs Issues Sell Rating

The stock has risen nearly 65% since the last trading day of 2019 and more than 125% since the March low, setting off extremely overbought technical readings that now favor an intermediate correction lasting for weeks and potentially reaching much lower price levels. For now, market watchers are waiting for Apple to confirm the initial production of 5G iPhones after delays caused by pandemic-driven supply disruptions.

Goldman Sachs analyst Rod Hall took aim on Tuesday, justifying a ‘Sell’ rating and $85 target, noting “Apple’s miss/beat track record is mixed, with the company failing to meet consensus expectations in 2016, 2018, and 2019. This compares to Microsoft beating revenue expectations for the last three years running and Amazon beating for three of the last five. To be more positive, we simply would like to see a consistent string of beat-and-raise quarters from Apple that matches the growth narrative.”

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Wall Street And Technical Outlook

Wall Street consensus has grown more cautious in recent months, with a ‘Moderate Buy’ rating based upon 25 ‘Buy’ and 8 ‘Hold’ recommendations. Three analysts now recommend that shareholders sell their positions and move to the sidelines. Price targets currently range from a low of $66.60 to a street-high $150 while the stock is trading right on top of the $116 median target. This neutral placement favors neither bulls nor bears.

A multiweek pullback that reaches May breakout support near 80 could ease overbought readings and test the 200-day moving average for the first time since Apple remounted that level in April. While it looks like a perfect position for sidelined capital to get on-board, tight stops may be needed because a failed breakout could expose the March into September rally as the climactic wave in an Elliott 5-wave rally pattern off the December 2018 low.

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