Think technical analysis is irrelevant? Apple Inc. investors might beg to differ.
A day after falling through a line in a chart monitored by analysts, its 200-day moving average, Apple volume exploded Tuesday: more than 120 million shares were traded, the highest volume since January. The stock, which also entered a correction this week, fell for the 10th time in 11 days, losing 3.2 percent to $114.64, a six-month low.
How obsessed was the market? Consider that the value of shares traded in Apple since the open rivaled that of the most popular exchange-traded fund in the U.S., the SPDR S&P 500 ETF Trust. Volume was more than double the 2015 average and it eclipsed the level from July 22, the day after the iPhone maker reported results.
“This is a very significant point in time for Apple,” said JC O’Hara, the New York-based chief market technician at FBN Securities Inc. “When people start to see a stock everybody owns trade down, they don’t want to be the last one selling it.”
Apple’s latest drop began on July 21 and accelerated with the stock recording its steepest post-earnings tumble since January 2013 after disappointing iPhone sales rekindled concerns over whether the company can keep making must-have products.
“With 74.5 million iPhones sold in the December quarter and the iPhone so important to earnings, the worry is it will get tough for them to post year-over-year growth,” said Mike Walkley, an analyst at Canaccord Genuity Inc. in Minneapolis, who rates the stock a buy. “Moving through the technical average then really exacerbated it today on big volume.”
The frenzy comes after Apple’s retreat Monday dragged it more than 10 percent below its 2015 high, meeting the definition of a correction. The slide worsened to 14 percent today.
Weakness in the shares is good news for neither Apple bulls nor the larger market, where the stock makes up 3.7 percent of the Standard & Poor’s 500 Index and 13 percent of the Nasdaq 100 Index.
Shares of the Cupertino, California-based company have plunged 12 percent in the last 11 days, while the S&P 500 is down 1.2 percent.
The last time Apple slipped more than 10 percent was over a 13-day period in December. The S&P 500 dropped 4.8 percent over that stretch before rallying to fresh records at the end of the month.
“The extent of the acceleration to the downside has been different than at other times of selloff,” Donald Selkin, who helps manage about $3 billion as chief market strategist at National Securities Corp. in New York, said by phone. “It’s a technical breakdown that snowballed. The question is, where is the fundamental change that people can’t wrap their heads around?”
While Chief Executive Officer Tim Cook has succeeded in introducing an entirely new category with the Apple Watch, sales remain modest, indicating that Apple will have to keep relying on the iPhone to fuel growth.
Losses in Chinese equities, where almost $4 trillion was erased from June to July, may leave consumers with less money to buy gadgets in a market Cook expects to become Apple’s biggest. Apple got 17.4 percent of its revenue from China in its last full-year reporting period, Bloomberg data show.
The last time Apple’s value traded exceeded the SPDR ETF’s was on Sept. 9, when the company unveiled the Apple Watch, Apple Pay and the iPhone 6 and iPhone 6 Plus in a two-hour presentation. That day, investors exchanged over 189 million shares as Apple stock declined 0.4 percent.
“The numbers that came in from the last earnings report was probably lighter than most people expected,” Michael Dorsey, an equity analyst with Boston Advisors LLC, said by phone. The firm oversees $3 billion and owns Apple shares. “If anything’s outside of the scope of what investors are thinking, that’s going to get hit in the stock’s price. We’re staying pat. I don’t think we want to be selling things in a rush.”