Downgrades hurt Apple share price as year kicks off



Apple ( shares have stalled into 2024 since being downgraded by Barclay's analyst Tim Long (neutral to underweight). The basis for the downgrade was weak hardware sales as iPhone 15 demand disappoints. In his note to clients, Long says that "We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables," with "worse data points out of China, together with developed markets remaining soft."

A few days after Long's downgrade, a second downgrade has followed from Piper Sandler analyst Harsh Kumar (overweight to neutral). Kumar is worried about handset inventories for the first half of the year, also predicting that growth rates for unit sales have peaked. He also cites the slowdown in China as a further headwind to the handset business.

The two analysts have slightly different price targets. Long trimmed his price target from $161 to $160, whilst Kumar, being more bullish, sees a target of $205 (down from $220). The share is currently price near $182.

Technical Analysis

Source: failed to take out its overhead resistance at the $200 mark (red shaded horizontal). Following Long's downgrade, price gapped lower on the open for this week. Since then, the green 5-week EMA has hinged and is looking to cross below the orange 10-week EMA (blue arrow). This will be a bearish development if it succeeds. Already Apple's weekly RSI has dipped below 50 (green rectangle), suggesting a turn in momentum. If it maintains on the bearish side of 50, the EMAs will cross down and develop angle and separation.

However, if the RSI's foray into bearish territory proves to be temporary, the market may treat this decline as a dip in a longer term uptrend, dependent on the $200 psychological resistance level.

Russell Shor

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.

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