Apple share price analysis for July: will it rise to $400?

Technicals show that the price is likely to rally next month.

Apple shares are continuing to rally, making consecutive all-time highs, through mid-June. The seasonals point to positive returns in July, while implied volatility on the technology giant is sliding and still has further room to decline.

Seasonal look stellar

The upward momentum in Apple shares is likely to continue given the strong seasonality seen in July. During the past 10 years Apple shares have climbed 90 per cent of the time, with an average gain of 6 per cent. This generally means that Apple reports robust earnings during the Q2 and the stock prices rallied into the earnings release. 

Implied volatility has dropped sharply

The implied volatility on Apple shares has tumbled since hitting a high of 104 in March as reflected in the Apple VIX reported by the Chicago Board of Options Exchange. The VXAPL is now hovering near the 36 level – it is equal to the 50-day moving average and reflects some complacency. 

Citi Research forecast

Citi Research raised its price target on Apple shares to $400 per share from $310 while maintaining a buy rating on the stock. This is the highest market on the street for the technology giant. The impetus for Citi's change in the price target of Apple is the upgrade cycle for the new 5G phones. The cycle is likely to take place later in the year, with a 5G offering available during the Christmas season.

Apple share price technical analysis

Apple shares are consistently making new highs, with support seen near the 10-week moving average at $312. Medium-term momentum has turned positive as the MACD index generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the nine-week moving average of the MACD line). The MACD histogram also generated a crossover buy signal, slicing through the zero-index line. The MACD histogram trajectory is positive and points to higher prices.

The RSI is also continuing to rise. The index is fast approaching the overbought trigger level of 70. There is still room to run. The last time the RSI on Apple shares hit new highs, it registered a weekly RSI reading of 90. 

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Momentum on the fast stochastic is beginning to consolidate, which might mean there is a short-term pause in price action. The fast stochastic reached this level in early 2020 and moved higher to sideways for most of the Apple rally.

Apple stock analysis: the bottom line

The upshot is that Apple shares will likely rally into and through July ahead of the company earnings release. The upgrade in the share price from Citi and the robust seasonal returns in July should keep the trend from left to right. The technicals are strong and momentum remains positive, which should keep the rally in check. There is room for momentum to continue to rise, which should keep upward pressure on prices.

 

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