Apple stock may have fallen far enough, but this could be a nightmare

Apple stock may have fallen far enough, but this could be a nightmare

Apple Inc.'s stock has fallen far enough and for long enough to produce a somewhat ominous bearish chart pattern that shouldn't appear during the short COVID 19 induced bear market selloff of early 2020.

AAPL, the technology behemoth's stock, rallied 1.2% in the afternoon. It has rebounded 9.6% since closing at a 10 month low of $137.35 on May 19, which was 24.5% less than the Jan. 3, 2022 record close of $182.01.

The stock has fallen far enough and for long enough to put its 50 day moving average DMA on track for a short-term trend tracker, which many chart watchers view as a long-term trend tracker, on track to cross below its 200 day moving average DMA, which is viewed as a dividing line between longer-term uptrends and downtrends, as early as Friday.

The death cross, referred to as a crossover, is seen by some technicians as the spot where a shorter-term selloff graduates to a longer-term downtrend.

According to FactSet data, Apple's 50 DMA fell to $159.573 on Thursday from $159.939 on Wednesday, and declined by an average of 30 cents over the past 20 sessions, while the 200 DMA was up to $159.489 from $159.487. The death cross should appear on Friday at that pace of DMA changes.

Death crosses can be useful in putting a stock's recent performance in perspective, as they are well telegraphed and aren't necessarily good market timing tools.

The stock fell as much as 31.4% from the then-record close of $81.80 on February 12 to the five-month low of $56.09 on March 23, as the COVID-19 epidemic fueled fears that lock-downs would cripple the economy.

The stock may have fallen far enough, but not quiet long enough, as the nearest 50 DMA to the 200 DMA was $2.473, or 3.7% above it, on May 18, 2020.

The stock fell 18.7% to the March 8 closing low of $116.36 from the then record close of $143.16 on January 26 during the early 2021 correction. That wasn't significant enough to produce a death cross, as the closest the moving averages got was $3.758, or 3.0%, on May 27.

Apple's last death cross appeared on December 20, 2018, after the stock plunged 32.4% from a then-record $58.02 on October 3, 2018. The stock fell another 9.3% before falling to a 21 month low of $35.55, which was 38.7% below its record.

The stock was down 17.5% from its previous record close of $33.25 on February 23, 2015, the same before it appeared on Aug. 26, 2015, with the stock down 17.5% from its previous record close of $33.25 on Feb. 23, 2015. The stock didn't bottom until it dropped another 17.7% to a near two-year low of $22.58 on May 12, 2016.

Among Apple's high-tech and mega-capitalization peers, Microsoft Corp.'s stock MSFT, produced a death cross on March 15 and declined 5.2% since, Alphabet Inc. shares GOOGL, GOOG, have fallen 11.9% since their death cross appeared on March 9th, and Inc.'s stock AMZN has slumped another 10.9% since making a death cross on January 25.

The Dow Jones Industrial Average DJIA, produced a death cross on March 8 and has gone up 1.3% since, while the pattern appeared in the Nasdaq Composite Index's COMP, chart on February 18 and the tech-friendly index has lost 9.5% since.

Opinion: The Dow, S&P 500 and Nasdaq have now suffered a death cross, here s why this could be reconstructed.