Shares of Apple (AAPL) have come perilously close to breaking below the 200-day moving average (DMA) – a level it hasn’t closed below in 195 trading days (6/3/21). The chart below doesn’t include today’s trading so far, but as we type this now, the stock is trading below its 200-DMA of $153.27.
In the post iPod era (October 2001), the current streak ranks as the 8th longest of consecutive closes above the 200-DMA. Ironically, the current streak just moved into 8th place last week after it eclipsed the 193 trading day streak that ended two years ago yesterday at 193 trading days. The chart below shows historical streaks where AAPL traded above its 200-DMA since the launch of the iPod. Again, while 195 trading days may sound long, the current streak ranks nowhere close in length to the three-year streak that ended in May 2008, and the two-plus year streak that ended in 2011.
So how has AAPL stock performed after prior extended streaks of closes above its 200-DMA came to an end? The table below lists each of the prior nine times that AAPL first closed below its 200-DMA and shows how the stock performed going forward. For each period, we show AAPL’s performance in the six months leading up to the end of the streak, and then how the stock performed over the following week, month, three months, six months, and one year.
Of the prior streaks shown, AAPL’s median performance in the last six months of the prior streaks was a gain of over 11% with only one period of negative returns. With a gain of 2.7% over the last six months, if AAPL closes below its 200-DMA in the near future, its performance during this period will rank as the second weakest of the streaks shown. Once AAPL ends the streak, its short-term performance was weak with median declines of 5.0% and 0.2% over the next week and month, respectively. In each case, the stock was also down more than half of the time. For a stock like AAPL which has performed incredibly well over the last 20 years, these short-term returns are well below the historical average of 0.8% and 3.0%, respectively.
Although short-term returns for AAPL after breaking below its 200-DMA were weak, over the following three months, the stock generally got back on track with a median gain of 17.1% and gains more than three-quarters of the time. That compares to a median gain of 9.3% for all periods since October 2001. Six-month returns were also slightly better than average on a median basis (19.5% vs 18.5%) although the consistency of positive returns was lower. Finally, looking out over the next year, shares of AAPL experienced a median gain of 24.0% with positive returns just over 60% of the time. While 24% is nothing to sneeze at, it’s actually weak when you consider the fact that AAPL’s median one-year return for all periods since 2001 has been a gain of over 40%. As the individual periods indicate, AAPL’s performance following prior breaks of the 200-DMA has varied widely, but in aggregate, the stock has tended to underperform its historical average in the short term but then show some improvement over the following three to six months. Click here to try out Bespoke’s premium research service.
As always, investors should use any names listed as a starting point for further research. None of the information in this report or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. Past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.
