Apple Shares’ “Death Cross” to Turn “Golden Cross” Very Soon

Image of Apple laptopTech titan Apple Inc. (NASDAQ:AAPL) has seen its shares stick below a key technical level for more than a year, but that’s all set to change soon.

Apple’s shares hit a “death cross” over a year ago, when its 50-day moving average crossed below its 200-day moving average. Based on recent performance, however, the 50-day is on track to cross over the 200-day by September 6, which is called a “golden cross.”

The only question is, will the technical pattern flip turn into gains, or will the stock tank like the last time this happened?

From MarketWatch:

The only other time Apple’s 50-day moving average stayed below its 200-day moving average for at least a year—from Oct. 9, 1995, to Nov. 21, 1996—the ensuing bullish “golden cross” lasted less than two months, and prices resumed their tumble almost immediately.

aapl-mw-death-cross
Chart: MarketWatch

There have been 24 previous Apple golden crosses, and their record as a buy signal has been mixed at best. But after the Nov. 22, 1996, golden cross, the stock resumed its decline within days, with the next death cross appearing on Jan. 10, 1997. The stock didn’t bottom until it fell another 48% through July 2, 1997.

But that’s all ancient history now.

What matters these days is how the market reacts to the stock’s next golden cross — if it does at all. Technical analysis isn’t necessarily predictive of anything, but it allows us to examine price action closely and study patterns to make an educated guess as to where shares may be headed.

AAPL-2016-08-28

Apple shares closed at $106.94 on Friday, down $0.63 (-0.59%). AAPL has gained 1.6% year-to-date, versus a 6.6% rise in the S&P 500 during the same period.

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