After rallying nearly 40% this year, Apple could be on the verge of a major breakout.
Piper Jaffray chief market technician Craig Johnson says the foundation for another massive move higher is forming.
“Over the last couple years, this has been a pretty big consolidation pattern that has been forming, and that’s typically a bullish type setup here in the charts. From my perspective, it looks like the stock is setting itself up for another leg higher,” Johnson said Friday on CNBC’s “Trading Nation.”
“When you measure the height of that consolidation, I can see the stock move up toward $270 to $285,” he added. “Also, on a relative basis, Apple continues to outperform the S&P 500. So I think you’ve still got to be buying the shares in here at these levels.”
A move to the higher end of his range at $285 implies 30% upside. It would also blow well past Apple’s record high of $233.47.
Gina Sanchez, president of Chantico Global, isn’t as bullish on the company. She says a maturing market evidenced by lower iPhone prices and a below-anticipated subscription price for Apple TV+ could put pressure on the stock. On the plus side, Apple could escape some of the regulatory scrutiny coming down on fellow tech companies regarding user privacy.
Sanchez adds that the sell-off in Apple may be overdone and that it presents an opportunity for investors to reenter or add to their position in the stock.
“There are definitely headwinds for Apple — the maturing market as well as continued U.S.-China trade relations. That will continue to weigh on Apple,” said Sanchez. But, “the valuations are probably too cheap at this point even considering those negatives. Now, I’m not saying this is a huge buy here, but you have to weigh all of those things.”
Apple trades at 17 times forward earnings, up from a low of 15.5 times in early August. The XLK technology ETF trades with a multiple as high as 20 times forward earnings.
