Apple stock has produced a "death cross" on its chart. The name alone indicates doom, and this dreaded indicator can foreshadow further weakness for a stock, though not always.
The death cross forms as price action deteriorates and a stock's 50-day moving average crosses below the long-term 200-day moving average. For many chart readers, that change is a sign of more price declines on the way. It can also be a clue to those looking to short the stock.
Usually, the death cross is a lagging indicator that happens after a stock has already made sell signals.
When the opposite happens — the 50-day average overtakes the 200-day moving average — it's known by the more friendly name of "golden cross."
In the case of Apple stock, its 50-day line crossed below its 200-day line on March 14.
The last time Apple did that was in June 2022, and the stock was already several weeks into a major decline. The two lines touched in September 2022 and the death cross expanded from there. Apple's latest golden cross was in March 2023, about 10 weeks after it bottomed.
Apple Stock Chart's Bearish Features
Apple broke out of a cup-with-handle base with a 192.93 buy point on Dec. 5. But two weeks later the stock started to roll over. It undercut its 50-day line on Jan. 2, which was the first sell signal.
Despite a rebound later in January, the stock resumed its decline. By early February, the 50-day line was curving lower. In February, shares started moving below the 200-day line, which was another sell signal. About this time, the stock had fallen more than 7% below its buy point, which was another sell rule.
Its largest volume spikes have occurred on down days, including 136.7 million shares traded on Feb. 29, the most since Feb. 3, 2023. Its up-down volume ratio of 0.6 indicates lower demand over the last 50 days. Its relative strength line is on a steep downturn along with the moving averages.
In addition, its dismal 24 IBD Relative Strength Rating has fallen from 72 three months ago. Apple stock's Accumulation/Distribution Rating of D is another sign that many institutional investors have soured on the stock.
Apple's Profit Outlook Not Encouraging
Analysts see more woes ahead for the iPhone maker with demand waning, especially in China, as Chinese competition increases.
Apple's sales increased a modest 2% in its most recently reported quarter, following four straight declines. A 16% rise in quarterly profit improved from flat, 5% and 13% gains in the prior three quarters.
March-quarter profit estimates are flat with a 4% sales decline expected, according to MarketSurge. Only mild improvement is expected with 5% to 6% earnings growth in the following three quarters. Quarterly sales are expected to tick up 2%, 4% and 6% in the next three periods.
Of the Magnificent Seven stock names, only Tesla has fared worse than Apple stock in 2024. Apple lost around 11% in 2024 thus far while Tesla sank 32%. Tesla stock formed a death cross in February.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
