As we navigate through the early turbulence of 2024, Wall Street has shown some signs of strain, particularly in the tech sector. Last week, the Nasdaq Composite took a notable dip, dropping over 2%.
At the heart of last week’s downturn was Apple, a tech behemoth that’s seen its shares decline by more than 5% following downgrades from two research firms.
But here’s the thing: this pullback in Apple, along with other major names, might just be an overreaction. Bespoke’s recent data suggests that the S&P 500 tech sector is edging into oversold territory, hinting at potential buying opportunities for the astute investor.
AAPL 52-week high/low
Let’s talk about the Relative Strength Index (RSI) for a moment. It’s a tool that measures the magnitude and velocity of stock price movements. Generally, a 14-day RSI below 30 indicates that a stock is oversold and could be ripe for a buy. Conversely, a reading above 70 might signal an overbought condition, often preceding a pullback.
Apple, in particular, has faced some headwinds this week. Barclays downgraded the stock on Tuesday, and Piper Sandler followed suit on Thursday. These downgrades have pushed Apple’s 14-day RSI to a remarkably low 8.87, making it the most oversold stock by this metric. Moreover, the stock is now flirting with its 200-day moving average, a threshold it hasn’t breached since last November.
Despite the current scenario, over 47% of analysts surveyed by FactSet are still betting on Apple, projecting an approximate 9% upside. This optimism amidst the market’s bearish sentiment could signal a potential rebound for Apple.
In summary, while the tech sector, led by Apple, has seen better days, the current market conditions might be setting the stage for a strategic buying opportunity. For investors looking to capitalize on these market dynamics, keeping a close eye on Apple could be a wise move.
