Apple Stock Begins Fourth Quarter With Strong Mojo

Apple Inc. (AAPL) stock entered October setting new all-time highs in each of the first three days of the fourth quarter. In doing so, the stock is testing my weekly pivot of $232.72. With a new quarter comes new monthly and quarterly levels, and for Apple, the quarterly and monthly value levels are $227.22 and $222.02, respectively.

The stock closed Wednesday at $232.07, up 37.1% year to date and solidly in bull market territory at 54.5% above its 2018 low of $150.24 set on Feb. 9. Before making this momentum run, Apple shares moved back and forth around my annual pivot of $176.57 between Jan. 12 and May 1. The stock opened the second half of the year above its semiannual value level of $181.73. This set the stage for the momentum run-up that followed the positive reaction to earnings reported on July 31. (See also: Apple's Breakout Seen Boosting Stock 10% Higher.)

The daily chart for Apple

Daily technical chart showing the performance of Apple Inc. (AAPL) stock
Courtesy of MetaStock Xenith

The daily chart for Apple shows that the stock has been above a "golden cross" for quite some time. Given this market-positive signal, the investment strategy is to buy weakness to the 200-day simple moving average, which was doable at $159.54 on Feb. 5. Another opportunity to buy at the 200-day moving average occurred on April 23, when the average was $165.64. The two horizontal lines in the middle of the chart are my annual and semiannual value levels of $176.57 and $181.73, respectively. The three horizontal lines at the top of the graph include my monthly and quarterly levels of $222.02 and $227.22, respectively, and my weekly risky level at $232.72.

The weekly chart for Apple

Weekly technical chart showing the performance of Apple Inc. (AAPL) stock
Courtesy of MetaStock Xenith

The weekly chart for Apple is positive but overbought, with the stock well above its five-week modified moving average of $219.58. The stock is also well above its 200-week simple moving average, which is the "reversion to the mean," at $137.49. Note how the "reversion to the mean" was a buying opportunity between the weeks of May 6, 2016, and July 1, 2016, when the average was $93.31. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 86.88, well above the overbought threshold of 80.00.

Given this analysis, investors should buy Apple shares on weakness to my quarterly and monthly value levels of $227.22 and $222.02, respectively, and reduce holdings on strength to my weekly risky level of $232.72. (For more, see: Apple's 5 Most Profitable Lines of Business.)

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