- Wednesday, October 16, 2024
Despite a rocky start to the month for investors after a strong performance in November, there is hope that tech stocks, specifically Apple, can come to the rescue once again.
On Tuesday, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite closed slightly lower. The S&P 500 experienced the smallest loss at just 0.06%, but only 89 of its component stocks ended the day with gains.
Interestingly, the top performers in the S&P 500 did not include any tech names. However, Apple was among the 89 stocks that saw gains, rising 2.1% to $193.42, continuing its post-earnings rally. Surpassing its 2021 peak, Apple is now just a few dollars away from its all-time closing high of $196.45, reached on July 31, with an intraday record just over $198.
According to Fundstrat Global Advisors Head of Technical Strategy Mark Newton, this should instill hope in investors. He believes that Apple's trajectory is bullish as it has broken out to its highest levels since the summer and surpassed the highs of the November "mini" consolidation period. This suggests that it has the potential to challenge the $198 record.
While Newton does not expect Apple stock to exceed $205 in this rally, he also believes that any downside risk could be limited.
Apple's Technical Structure Remains Strong
According to market analyst Newton, Apple continues to exhibit excellent intermediate-term technical structure. Newton suggests that even if there is some minor weakness following the next Federal Open Market Committee meeting on December 12, it will be short-lived. Ultimately, Newton predicts that Apple will reach new all-time highs in 2024.
Newton's confidence in Apple's performance leads him to believe that the company can contribute to the broader market's growth due to its size and influence.
Reasons to Remain Positive on Apple
Newton emphasizes that there are few reasons to hold a negative outlook on Apple. In fact, he believes that Apple's positive performance will prevent Big-Cap Tech stocks from weakening significantly. Therefore, it is still advisable to favor Large-Cap Technology.
Considering all these factors, the outlook for Apple going into the new year appears promising. With a weightage of over 7%, Apple holds the largest individual share in the S&P 500.
Tech Innovation Continues to Drive Stock Gains
In addition to Newton's viewpoint, others argue that ongoing innovation in the tech industry will continue to contribute to stock gains. The recent rally in 2023, fueled by the Magnificent Seven companies, reinforces this perspective.
Analyzing Price Targets
Despite this positive sentiment, analysts are not overly optimistic about Apple's potential gains. The average analyst price target for Apple stands at $196.53, according to FactSet. This figure is only slightly higher than Apple's previous closing high and represents a mere 2% increase from current levels.
To break through its prior high, Apple's gains would need to be sustainable in the long term.
Resilience of the Tech Industry
It is worth noting that the tech industry has proven to be resilient throughout the year, constantly surprising investors with its continued growth. Therefore, it is important not to discount the possibility of another year filled with positive surprises for tech stocks.
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