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Apple stock appears unfazed by the ongoing bull run in the US equities in general and tech stocks in particular. Since the start of 2024, the stock of the US tech giant has slid 5.2%, and the outlook appears to be even more bearish. This comes at a time when the benchmark indices are trading at their all-time highs.
The S&P 500 index hit its highest level in the history of 5,111 points last week. This translated into a 5.02% surge on the monthly timeframe as the index remains green for the fourth consecutive month. The positive sentiment can be attributed to the anticipation of the rate cuts by the US Federal Reserve in the coming months.
As per the CME FedWatch Tool which is one of the best indicator for the outcome of the FOMC meetings, there is only a 2.5 % chance of a rate cut in the March FOMC meeting. However, the probability increases to 20.9% for the May meeting. Therefore, if you are holding Apple stock, you must closely monitor the tone of the FOMC members.
Most analysts are pricing in 5-6 rate cuts this year. However, in reality such rate reductions will depend on the CPI and PCE inflation numbers of the coming months. While the inflation has significantly dropped in the past 12 months, it is still far from the Fed's target of 2%.
Meta, Microsoft, Google, and Nvidia have posted new all-time highs in the past few weeks. However, Apple shares are lagging in this rally as investors are mostly pouring money into AI stocks. The exponential surge in Nvidia stock in the last week is a testament to this shift in investor sentiment.
Despite posting good earnings in the last quarter, major investors are still skeptical of Apple's growth trajectory. This, together with the flow of capital to Artificial Intelligence, appears to be the primary reason for the underperformance of NASDAQ: AAPL in the last few months.
The title of this article is not clickbait, as the Apple stock price is indeed hanging by a thread. This outlook is backed by the following technical analysis on the 1D timeframe. You can see that the stock price broke below the upward trendline earlier this month, gaining acceptance below it.
The chart also reveals that there is strong support for NASDAQ: AAPL around $180 as the price has bounced off this level multiple times in since the start of 2024. This level needs to be held in order to avoid a major correction. In case of a breach of this level, the next support lies below $172.
