Apple Stock News and Forecast: Bounce seems overdue as RSI divergence signals turnaround

Apple (AAPL) stock continues to fall as it retraces from highs following the high inflation print earlier this month. This has brought all valuations low, and Apple has naturally followed suit. The stock has performed well this year, being flat year to date while most other stocks suffer, especially in the mega tech space.

Apple stock news

iPhone 14 is the big catalyst and sets up the next quarter for Apple. The key question is how much of the reported global slowdown will affect iPhone 14 sales. iPhones are expensive and seen as luxury goods. This segment usually suffers in a consumer recession as spending is curtailed.

However, some caveats apply here. The Apple ecosystem is highly priced and inelastic with a loyal consumer set that regularly upgrades to the latest model. The average age is younger and so less susceptible to other financial issues and also has high disposable incomes. Morgan Stanley pointed out in a note to clients last week that they see Apple and the iPhone 14 as somewhat immune from macroeconomic downturns. The investment bank says the iPhone is more a "staples like" product.

This is where Morgan Stanley and myself differ. Yes, there is an element of the staple. A mobile phone now is seen as an essential product for the vast majority of the population. We simply cannot leave home without it. Everyone has a price point though, and even if the Apple ecosystem means a certain loyalty is built in, it still does not stop the consumers from upgrading to older cheaper models or simply delaying any upgrade at all. 

However, I feel that Apple should still outperform for the remainder of the year given the timeline. iPhone orders should see a Christmas boost before the real damage is done in 2023. I remain with my $100 12-month price target, which you can read through here in our deep dive series.

Apple Stock Deep Dive: AAPL price target at $100 on falling 2023 revenues

Apple stock forecast

A bounce seems imminent in the short term at least. We already have a bullish divergence from the Relative Strength Index (RSI) and Friday's price action. A new low on Friday in this down move has not seen a new low on the RSI. Also, we have a hammer candlestick on Friday, another bullish pattern. This is a candle with a long wick but a much higher close than from the intraday low. This means a large intraday bounce and is a bullish sign, for the short term at least. The first target is a modest $153, the 50% retracement of the summer rally. $164 is the most recent spike high, and that would represent a significant move and turn the trend bullish again.

AAPL 1-day chart