Apple shares have been selling nonstop following a downbeat earnings report and a risk-off market environment. However, a bounce might be taking place soon as the stock is approaching a long-term support zone.
Price is near the rising trend line visible on the weekly chart and the support area is near the Fib levels as well. In particular, the 50% Fibonacci retracement level is at the $94.50 level and near the 200 SMA dynamic support.
Speaking of moving averages, the 100 SMA is still above the 200 SMA so the path of least resistance is to the upside and the long-term climb might resume. Stochastic is deep in the oversold zone, indicating that sellers might need to take a break and let buyers take over.
RSI is also indicating oversold conditions so buying pressure and profit-taking off the recent short positions might be in order. If so, the $94.50 area, which also coincides with a former resistance level, might keep losses in check and a bounce back to the previous highs might take place soon.
While Apple shares have been weighed down by growth concerns and weak sales projections recently, analysts say that it’s prime for buying at these cheap levels. “Growth headwinds won’t subside in the near term,” said Morgan Stanley analyst Katy Huberty. “But risk/reward is attractive with upcoming iPhone refreshes, steady margins and low valuation.”
Still, overall market sentiment might dictate where Apple shares are headed next, as the company’s revenues also hinge mostly on the Chinese market. Slow demand from the world’s second largest economy and one of Apple’s biggest consumers could hurt profitability in the long run, weighing on share price.
Also, the outlook for the US economy appears to be dimming, as the nation is struggling with low inflation and a slowdown in production. Weaker financial confidence is also set to weigh on Apple sales and shares if this sentiment persists.