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Asset Watch
Tuesday, September 10, 2024
The bulls have become the walking wounded on Wall Street, as a ‘sell the rally’ mentality dominates the price action. And with a mixed U.S. nonfarm payrolls report increases investors’ recession anxiety, September is shaping up to be another sombre month for the S&P 500.
As Apple prepares to kick off its new iPhone launch on Sep. 9, could a suite of fresh products be enough to change the narrative?
While product debuts have typically been “sell the news” events, Bank of America analyst Wamsi Mohan said that “shares could move higher” because “We expect Apple Intelligence to be available first in the U.S.” which should start a new “software-driven iPhone upgrade cycle.”
He also reiterated his buy rating and has a $256 price target.
The last two events in September 2023 and 2022 were as Mohan mentioned, “sell the news” events. If you analyse the vertical white lines, you can see that weekly corrections occurred soon after product debuts and there was material downside.
Even more ominous, the 2023 and 2022 weakness were aided by breakdowns below the 5 and 10-week moving averages, which turned into resistance en route to new lows. And with Apple closing below its 5 and 10-week MAs last week, the setup is similar to previous September swoons.
If investors bail on Apple following the event, the stock should find support near $200 (the horizontal white line). The key breakout level was retested during the August panic and Apple held firm.
As such, meaningful strength should emerge there if the correction continues.
A disciplined approach to trading the Apple Event is to listen to the technicals. If the stock recoups its 5 and 10-week MAs and they hold as support, the worst may be in the rearview. If not, you should respect historical precedent, and proceed with caution until the stock is closer to $200.
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