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Apple share price analysis for March: how the coronavirus affects the company

By David Becker

The stock is holding above support levels, while volatility hits fresh all-time highs

shares have been trading under pressure and have declined 25 per cent since hitting an all-time high near $327 in mid-February. Prices are hovering just above weekly support following the news that Apple has announced a new iPad Pro for sale beginning on March 18, 2020. The 2020 iPad Pro is getting a new chip, an ultra-wide camera, improved microphones, and a LiDAR Scanner, which can be used for better 3D scanning. Apple is also adding the new Apple Magic Keyboard, an attachable keyboard that essentially turns the iPad Pro into a MacBook.

While shares have tumbled they have faired much better than the Nasdaq as a whole as well as many other technologies and consumer discretionary companies. Implied volatility has surged to all-time highs on Apple shares, likely keeping price action volatility for the immediate future. Also, all Apple stores in China are now reopened, while all other stores around the globe remain shut.

Implied volatility on Apple shares hits all-time highs

The implied volatility on Apple shares, which is used to price “at the money” options hit fresh all-time highs this month at 104.40. This means that options traders believe that Apple shares could rise are fall more than 100 per cent from current levels over the next 12 months. This also means that there is likely to be continuing significant volatility in Apple shares.

Apple shares have tumbled but are hovering just above support near the 50-week moving average at 240. This is a critical level. A break below this would likely mean a test of the highs in Apple in 2018 seen near $233 and then a test of an upward sloping trend line that comes in near $222.

Apple technical analysis

Weekly Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses below the MACD signal line (the nine-week moving average of the MACD line). The MACD histogram crossed through the zero-index line which is also a crossover sell signal.

Short-term momentum is also negative. Both the RSI and fast stochastic are heading lower accelerating toward the oversold trigger levels of 30 and 20 respectively.

Apple analysis: the bottom line

The coronavirus has taken its toll on Apple shares. The stock is holding above support levels, while volatility hits fresh all-time highs. The pressure could push prices to target support near $222, but then there should be a rebound in prices. The last time the weekly fast stochastic moved below the oversold trigger level of 20, the stock price rebounded $200 eventually hitting its all-time high. Traders could look to purchase shares at the 50-week moving average down to the upward sloping trend line with the thesis that the shares will rebound.

FURTHER READING: Nasdaq analysis for March: the forecast for the month remains volatile

FURTHER READING: Innovative markets outlook: investing in new technologies

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