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Is Apple Stock still a Buy and Hold or Apple Losing its Market Leadership?

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Apple stock lost 6 % in September and 4% in this week.

This trigger a question that should investors still hold apple stock or sell the stock as stock is now trading below 50 day moving average, one of the key technical indicators used by many traders and investors.
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Stock is currently trading previous technical buy point 156.75. Some investors also  use stop loss below 6 to 8% of buy point.

September is  known as a bad month for US Equity market. Historically stock performance is negative in this month than any other month of the year.

This year broad index SPX and DJIA is doing so far ok. However, Nasdaq performance is not that good.

Especially market leader apple stock performance is worrisome.

September 2017 is a special month for apple stock. Because  apple announced  its latest model of Apple watch 3,iPhone 8  and iPhone X  for  10th anniversary of iPhone release.

All  apple fans and apple investors had a  lot of expectation from the 10th anniversary of iPhone release that also derived overall us stock market as apple is the largest market cap stock  not only in the Us equity market but also the whole world.

However, after apple announcement new iPhone and Apple watch at 12 September 2017, market reaction to apple stock was negative. Apple stock is already down more than 6% this month. Apple stock performance is worse than any other major index in the US equity market.

Interestingly, because of apple negative performance and every major indexes have apple stock as its one of major components, all the indexes is down. So apple is not down itself, it also drag down the us equity indexes also.

Apple performance is remarkably bad after September 12, 2017 announcement of new iPhone and apple watch release. Some reasons are as follows:

  1. Delayed iPhone X Release:

Investors had a lot of expectation from apple new announcement because of new iPhone X release. However, Apple CEO TIM COOK announced that consumer would not get new iPhone until  November 4, 2017.  This announcement makes apple investors hopeless. As we see September 12, 2017 apple stock reaction to the after the announcement.

  1. Apple watch 3 connection problem:

Even though apple fan was not happy because of iPhone X  delayed shipment, Apple watch 3  announcement bought some satisfaction for  apple fan and investors because of its especial feature of cellular connectivity.

September 20, 2017  Apple admitted that Apple Watch 3 has some problem with cellular connectivity. Cellular connectivity feature of apple watch make it exceptional product at September 12 announcement.

Market reacted hardly after this news, Apple stock lost 1.7%. More importantly, because of this fell down apple stock closed below its 50day moving average and closed below its previous technical buy point 156.75.

This close is very important for short term trader.

3.iPhone X Short Supply:

Apple stock lost 1.7% amid speculation that iPhone X production could be in  shorter supply  than previously rumored.

Market reacted harshly to this speculation. One of the reason market harsh reaction is that market adopted  this speculation as reality.

Second reason is   since apple stock is traded below some key label of technical indicators, some short-term trader may take advantage of this situation and short the stock.

Apple Stock Chart
Apple Stock Chart

Another possibility is this sharp fell down may triggered some stop loss of the investors and traders.

Again, Apple stock is heavily weighted to many retail investors and institutional funds portfolio.

6% down of apple stock from top may be uncomfortable for many investors. They may  want to reduce apple concentration to the portfolio.

If we see another round of sell off , this is not impossibility. Because another 1 or 2 percent down of apple stock may trigger stop loss to many apple investors portfolio.

apple weekly chart
apple weekly chart

In the long run, apple stock still a good stock to hold and even buy as we see long term trend for apple stock is intact.

This down ward move of apple stock brings opportunity to some investors to  add  apple stock to their portfolio, who does not have any apple stock in their portfolio or have very little weight of apple stock in the portfolio.

However, those who are highly concentrated to the apple stock, they could reduce some weight to the apple stock. Because no one knows for sure how  apple stock will react in future.

Apple stock is still good stock to hold for long term investment and even  buy for some  stock investors because of its recent pullback.

However,in the short run, we  may see more volatility of the stock movement. Even stock can go down another few percentile before its bullish upward move.