The Apple share price has been hovering near a key support level after the recent pullback and a strong close to the week could see the stock attempt another rally. AAPL is now 20% lower than the September 1st highs near $135, where the stock went through a 4:1 split.
Apple’s recent drop has seen a correction in its valuation, which was starting to get a bit high. The current price-earnings ratio is still pricey at 32x but future earnings put the forward P/E at 28x, so this is more appealing for a longer-term hold.
The market is awaiting the launch of new iPhone models, which are expected to be released in October. With smartphones accounting for over 50% of the company’s revenues, strong demand could fire up earnings, and the share price. Many analysts now expect the new iPhones to feature 5G connectivity. This would be a key selling point with a further rollout of 5G seen this year.
Apple’s stock has deflated since a disappointing smartwatch event, which the market hoped would bring iPhone news. The company showcased its Apple Watch 6 and an upgraded iPad Air. Apple will see the release of its latest earnings in a month’s time so the stock will likely move with the indices in the meantime. After the recent selling, a bounce in the Nasdaq would help propel Apple to further gains ahead of the Q4 release.
Apple trades at a key support level and the pre-market is suggesting a higher open. If Apple can see a strong day then a further rally is likely. A close over the 50-day moving average near $112.00 would be ideal. A drop back near $105.00 in the days ahead would signal further lows.