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Chart Advisor: Signs of Buying

Investopedia

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Monday, 13th September, 2021

1/ Indexes slow the selling at support 

2/ Apple buyers stubbornly hold support 

3/ How Apple performed during past product launches 

4/ The bottom line

1/ Indexes Slow the Selling at Support 

Major indexes pumped the brakes on a slide that started last week. State Street’s S&P 500 (SPY) and Dow Jones Industrial Average (DIA) index ETFs halted their five-day skids. DIA led major index ETFs, climbing 260 points, followed by the iShares Russell 2000 ETF (IWM). Invesco’s Nasdaq 100 ETF (QQQ) nearly rallied to finish above its close, but instead ended the day with a 0.07% loss. Was last week’s pullback just a pit stop before moving higher, or a sign of a larger reversal? 

Investors could be waiting for the numbers of tomorrow’s Consumer Price Index (CPI) report. This index, which measures the change in the price of goods and services purchased by consumers, accounts for a majority of overall inflation. An increase in inflation could bump up the Federal Reserve’s timeline for tapering bond purchases.  

2/ Apple Buyers Stubbornly Hold Support 

Despite investors having recently bid down shares of Apple (AAPL), option traders appear to be positioned with the expectation that the iPhone maker will re-approach its recent highs. After falling more than 3% Friday following an unfavorable court ruling regarding app store commissions, the stock remained mostly flat ahead of the iPhone 13 release on Tuesday. 

Heading into the trading session, AAPL’s open interest favored calls over puts – 5.1 million to 4.1 million. Trading volumes on Monday saw calls outnumber puts nearly 2-to-1. Option traders appear to be unfazed coming off of AAPL’s largest one-day loss since March amid widespread concern about an impending market correction.

While the share price movement after Friday’s tumble didn’t express immediate investor sentiment one way or the other, option traders have made their opinion clear on AAPL re-gaining, and perhaps exceeding, recent highs. 

3/ How Apple Performed During Past Product Launches 

Many investors may have decided to stay on the sideline with AAPL due in part to the iPhone 13 release tomorrow. Historically, iPhone releases have not been a major catalyst for intraday movement for AAPL. The stock has fallen on 72% of previous product release days. The average decline during those days was less than 1%.

However, 30 days after an iPhone release AAPL stock, on average, rises 1.3% from the day of release. AAPL averages a further 0.88% increase 60 days after an iPhone release. After the last three iPhone releases, AAPL stock has gained an average of 17.9% after 60 days. While the release day itself may not be the biggest catalyst for price movement, it could be seen as a tentpole for price movement in the near term.  

4/ The Bottom Line 

Stocks seem to show subtle signs of buying at support. However, with Apple’s new product launch just around the corner, investors might be uncertain about what to do next. 

Originally posted on 13th September, 2021

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