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Asset Watch
Tuesday, November 5, 2024
Election week has arrived, and the S&P 500 has largely avoided any temper tantrums. And with Big Tech earnings out of the way (except for NVIDIA), sentiment falls squarely on the shoulders of the election results.
However, while the developments may incite short-term volatility, the long-term impact is typically immaterial. As a result, could Apple be the perfect play if a correction strikes?
Warren Buffett made headlines on Nov. 2, as his conglomerate continued its fire sale of Apple. The position has been cut by 67% from Q3 2023, even though the firm still owns roughly 300 million shares.
In contrast, Wedbush analyst Dan Ives maintained his $300 price target and wrote on Oct. 31:
“Apple delivered a very strong September quarter with iPhone revenues that beat the Street by $1 billion on the top line with the iPhone 16 upgrade cycle showing initial success out of the gates….
“The step-by-step rollout of Apple Intelligence will result in a strong December quarter but will also flow into the March and June quarters, which should be good news for,” Apple’s fiscal 2025.
While Apple’s fundamental outlook may lie somewhere between Buffett’s pessimism and Ives’ optimism, the technicals remain constructive, which usually means the bulls deserve the benefit of the doubt.
For example, Apple has price support near $216, and while the stock ended last week below the 20-week moving average (the blue line), the key level has held in recent months, so it may have been a false breakdown.
If an election sell-off unfolds and Apple cuts below $216, next-level support is near $197 (the previous breakout zone). Moreover, the 50-week MA (the yellow line) is right near $200, which offers an additional reinforcement.
Add it all up, and Apple’s uptrend has plenty of technical allies.
If everything goes smoothly, Apple may recoup the 20-week MA near $223 and make a run back toward the all-time highs. If not, and the election results are murky and the drama creates uncertainty, a potential correction could offer a solid buying opportunity around the $200 area.
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