Apple weighed down by bears and rivals

With the recent rally in Apple’s stock price, we’ve been calling for traders to watch out for a sell-off on profit-taking close to the product announcement date on September 9.

Apple logo on building
Source: Bloomberg

Apple’s stock price typically sees a sell-off on announcement day, as investors cash out on the stock price lifted by months of hype and speculation. The iCloud security saga has also provided an excuse for profit-taking.

It looks like the sell-off has come a bit earlier than usual, as Apple’s stock price shedding nearly 5% over the past few days. This comes after the hype over possible features such as an integrated wallet and a possible glimpse of Apple’s line up of wearables.

Product

Stock price % change on announcement

Longest slide within a week

iPhone 5S, 5C

-2.28% (Sept 10, 2013)

-11.07%

iPhone 5

+1.39% (Sept 12, 2012)

NA (-2.98% a month later)

iPhone 4S -0.56% (Oct 4,2011) -1.28%
iPhone 4 -1.96% (Jun 7, 2010) -4.99%
iPhone 3GS -0.57% (Jun 8, 2009) -5.93%
iPhone 3G -2.17% (Jun 9, 2008) -7.15%
iPhone +8.3% (Jan 9, 2007) NA (-2.57% a month later)

Is there a correlation to Apple’s product launches and its stock price? History would suggest a very strong case, judging from previous shareholder reactions. 

On a long-term view, the stock looks to be on an uptrend though it is likely to see some downward pressure in the interim. This hasn’t been helped with rivals such as Samsung and Huawei unveiling their own products in the lead up to next week’s event.

Apple’s stock price has just crossed under the 20 DMA on the Bollinger Bands. Its MACD has also just crossed under its signal line to suggest a sell signal.

Traders can consider taking advantage of the profit-taking momentum with a short position. For longer-term investors, a possible entry to look out for will be when the RSI indicator approaches the 30 point level and oversold territory, which will suggest a buy signal.

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