Apple (AAPL.us) has charted a lower peak followed by a lower trough on its weekly chart. This puts Apple into a defined downtrend here. Of concern, Apple's candlesticks are trading below its black 30-week EMA, and it looks as if the EMA is turning down. Moreover, the weekly RSI is below 50 (green rectangle). This is the bearish side of the indicator and suggests that an underlying bearish momentum is present. The longer it maintains below 50, the more pressure Apple is likely to face.
Contributing to this price pressure is a downgrade in the stock by Keybanc Capital Markets, who has changed their rating from overweight to sector weight. Keybanc gives several reasons for the downgrade:
- Valuation is high and at a premium to the Nasdaq relative to history.
- US sales are potentially facing headwinds.
- Internationally, growth expectations are aggressive.
- Top line and bottom line estimates look rich.
Thes company fundamentals are being compounded by higher rates, which are pressuring risk markets in general. One way to gauge the company's progress is with reference to its blue downtrend line. This trendline defines the speed of the downtrend, as per the lower peak followed by lower trough. If the price candles can move above the blue trendline, the downtrend will be waning but if the gradient steepens, the downtrend will be intensifying.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.