Where next for Apple shares?

Apple stock has been a driver of US indices recently and in particular the US tech index Nasdaq (US100). 

Following a rally, market capitalization of Apple exceeded market capitalization of all companies in the Russell 2000 index. Source: Bloomberg, XTB

• Apple has experienced a strong rally following a drop triggered by the coronavirus pandemic in February and March. 

• The stock not only fully recovered from the aforementioned decline but rallied 150% off March's low. 

• Apple decided to implement a 4-1 stock split of which was followed by an increase of the share price of 4.2%

• Apple added to the gains after reports saying the company asked its suppliers to produce 75 million 5G iPhones for later this year.

• The news signalled that the US tech company does not expect a drop in demand. 

 Apple shares price historically performs strongly after an iPhone event

It's important to note that Apple formally launches its next product event on Tuesday 15th September. Historically, you can see below that the share price reacts very positively to these product launch events, with the shares rising in price nine times out the last twelve launches, with the average gain being 6.7% in the following 60 days after the event. Can we expect something similar after next Tuesday's event?

• Looking at the chart above, we can see that most Iphone launches have resulted in positive price performance 60 days after launch. 

• Exceptions can be found with the Iphone 5 (which did not meet expectations) and the IPhone SE released in 2016. 

• Furthermore the majority of recent announcements have been made in the second week of september 

• Pandemic situation could affect announcement date

• Current economic climate should also be considered as the Coronavirus pandemic has led to massive unemployment figures and record level economic downturn. 

• Recently the stock pulled back as negative economic data and worsening covid-19 situation is weighing on sentiment. 

• US-China relations could also be a factor as many Apple products are produced in China or use components from there

• Price dropped by almost 19% since the beginning of the month reaching a low of $111.48 before rebounding slightly.

• Nasdaq (US100) also pulled back from it’s all time high of 12460

• The index dropped over 12.25% reaching the lowest level since early August (10937)

• The xStation5 chart shows the similarity of the moves when comparing Apple stock to the US100 index