🔒 Apple market challenge: Stock plunges 14%, now most oversold since 2018

In 2024, Apple Inc. grapples with a challenging market, marking a 14% decline from recent highs and a 12% drop for the year. Analysts note the stock’s most oversold state in years, down 7.2% over six consecutive negative sessions, erasing over $200 billion in market cap. Jefferies LLC’s Michael Toomey highlights the prolonged underperformance, emphasizing the unprecedented negativity surrounding Apple. Despite this, options traders exhibit minimal fear, maintaining optimism amidst broader technology stock positivity. Apple’s resilience is tested amidst concerns over iPhone sales in China and a European Union fine.

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By Ryan Vlastelica

Apple Inc. has struggled in 2024, and the recent weakness has the stock looking like it is the most oversold in years, analysts said. ___STEADY_PAYWALL___

Shares of the iPhone maker are down 14% from a recent peak and have dropped 12% this year, compared with a gain of 7.42% for the Nasdaq 100 Index. Apple shares have been pressured by concerns over iPhone sales in China and a fine from the European Union.

The stock fell 0.3% on Wednesday, its sixth straight negative session. The 7.2% decline over that six-day drop has erased more than $200 billion in market capitalization.

“At some point this hate is going to be too much, and most oversold in six years seems like a good place to start,” Michael Toomey, head of TMT trading at Jefferies LLC, wrote in a note to clients. 

He said the length of the stock’s underperformance relative to the Nasdaq 100 has been notable, adding that “feels like every day we get another negative AAPL datapoint, and it’s not particularly cheap.”

Jefferies looked at the relative strength index of long Apple positions versus short positions in the Invesco QQQ Trust Series 1, the exchange-traded fund that tracks the Nasdaq 100. Based on this, “this is the most oversold AAPL/QQQ has been since early 2018.”

Bespoke Investment Group LLC wrote in a post on X that Apple is more than three standard deviations below its 50-day moving average, and that “it hasn’t been this oversold since March 16th, 2020 in the throes of the COVID crash.”

Even with the stock’s recent weakness, Apple shares trade near 25 times estimated earnings, above their 10-year average multiple of 19.

Despite the selloff, options traders are showing few signs of fear, buoyed by the broader optimism about the biggest technology stocks. 

Implied volatility for three-month options has picked up from recent lows, but is around the middle of the range for the past year. And the put skew, measuring the premium investors will pay for protection against a decline, is holding near a two-year low.

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