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Pro: Apple's Chart Shows No Major Trends Are Broken

Jayson Derrick

Down 25 percent from its all-time highs of $233.47, Apple Inc. (NASDAQ: AAPL) investors could find comfort from three encouraging developments, according to Mark Newton, president and technical analyst at Newton Advisors.

What To Know

The risk-reward profile for Apple's stock is favorable at current levels for three reasons, Newton said Tuesday on a CNBC "Trading Nation" segment.

  • Despite trading in the red on a daily basis, Apple's MACD (moving average convergence/divergence) on the daily chart is still positive, which implies upward momentum.
  • The iPhone maker's weekly chart looks bullish with the RSI (relative strength index) tracking near 30, which Newton said marks the cutoff for a stock being oversold.
  • Sentiment has quickly moved against Apple in recent weeks as it has been labeled a "trade war stock" but the 20-percent pullback brings the stock close to a support level of $170 with a downside risk to just $160 per share.

Attractive Valuation

Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, shared a similar bullish stance on Apple's stock during the segment. He said Apple's stock valuation at just 13 times forward earnings and is projected to grow 12 percent in 2019 and 11 percent in 2020. Coupled with Apple's $40 billion services business is growing at 25 percent, the market is discounting Apple's stock at current levels.

"Remember in these types of markets when you buy, that's what creates outperformance," Bapis said. "So, we're going long."

At time of publication, Apple's stock was trading around $174.08 per share.

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