By Matt McCallMay 12, 2017
When you’re the largest company in the world, it can be difficult to top the return of a basket of the 500 biggest publicly-traded stocks. But don’t tell Apple (AAPL) that, because its shares are up more than 32% this year versus a gain of just 7% on the S&P 500.
This week was a big milestone for AAPL as the company’s valuation exceeded $800 billion. Apple is the first U.S. business to achieve that feat, and there is now a real possibility that it will be the first trillion-dollar company in the coming years. Just think, it took less than three years for Apple’s valuation to increase from $700 billion to $800 billion.
A lot of the optimism surrounding the stock right now has to do with the next iteration of the iPhone, which is expected out later this year. There is pent-up consumer demand for the new product (myself included!) that should send sales soaring, but I suspect the stock is already pricing in that potential boom.
Still, the long-term chart remains bullish, although there haven’t been many buying opportunities this year as pullbacks have been few and far between. Let’s talk about what I’d like to see before pulling the trigger:
Long-term buyers: When looking for a buy-and-hold investment, all pullbacks of 5% or more should be bought with the anticipation that the larger up trend will continue.
Short-term buyers: AAPL is overbought in the near term and certainly due for a rest. I’d look for the weakness to take it down to the support zone between the 20-day moving average around $146 (the blue line) and the 50-day moving average near $143 (the red line) – a pullback of about 4% from current prices. The shares have found support at this level since the November election and there is nothing to suggest that the trend will not continue.
As many of you already know, I have been a major bull on AAPL for years and I continue to be one today. However, I am also a realist. I believe a large portion of the recent rally has been tied to the overall flow of money into large tech companies and anticipation of solid iPhone sales later this year.
There are two events with the potential to trigger a larger pullback. The tech rally starting to lose steam could be the first culprit. And the second could come after the actual sales numbers are released for the next iPhone. The latter is months away, though, and at this point I would be a buyer of AAPL on any weakness for both the short and long term.
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