Apple shares have gradually been trending lower, with a descending trend line connecting the latest highs of price action. Price broke out of its short-term range to start a larger correction to the trend line and Fibs.
The 38.2% Fibonacci retracement level appears to be holding as resistance for now, possibly pushing Apple shares back to the lows at $92. On the other hand, a higher correction to the 50% Fib near $104 could still be possible, as this lines up with the 200 SMA and area of interest.
Risk appetite has picked up last week and earlier in the week, allowing Apple shares to advance. However, weak data from China and resurfacing fears of an oil supply glut could keep these equity gains in check.
The Chinese trade balance showed a smaller than expected surplus, fueled by double-digit declines in imports and exports. This suggests that demand for products, including Apple gadgets, has significantly weakened. Keep in mind that Apple has already projected declining iPhone sales, although it is hopeful that it could get a bigger share of the market in China, where cheaper competition from Asian brands is dominating.
Also news of Apple’s ongoing battle with the FBI to unlock an iPhone used during the San Bernardino shooting is weighing on investor confidence in the stock, as the amounts spend on lawsuits could wind up increasing company expenses and putting a drag on profitability.
Still, reports of Diagog Semiconductor projecting strong growth momentum for its connectivity and power conversion products could keep Apple shares supported, as the UK company receives 70% of its business from Apple. In addition, investors are hopeful that a larger iPhone is in the works and is about to be released soon, likely yielding further upside later on.
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