Apple broke an important support

Apple has now broken the USD130 level. This level is important is because it is the Jun low and the lowest for 2022. Therefore, the break marks a lower low and that would be quite bearish because it has already broken below its trend line joining the Mar 2020 pandemic low and the Jun 2022 low and is also below its MA200. These are shown in Fig. 1.

Apple's stock tested the USD130 level the past few days before finally breaking. The stock fell as iPhone supply disruption jitters persist amid labour shortages at Foxconn's main production facility in Zhengzhou, China. Research firm TrendForce cut its estimate on iPhone shipments for 2022 and the first quarter of 2023. The research firm said it expects 47 m units were shipped in Q1, down from a previous estimate of 52 m.

Apple is an important leadership stock in U.S. indices. A breakdown in the stock is not good for the broad stock market.

Apple stock has declined despite it often being viewed as a safe-haven stock with a formidable balance sheet flush with cash and a steady stream of repeatable services income. But just like other large companies, the volatile global economic situation has hit Apple in the form of slowing iPhone and accessory sales as well as production delays out of China where there is a surge in COVID-19 cases.

The external crosscurrents have sent most analysts on Wall Street back to the drawing board with respect to their financial estimates for Apple.

"We are again moderating our expectations for the Dec-Q (F1Q23) on the back of the impact of the recent supply chain challenges faced by Apple in relation to operations at Hon Hai's assembly facility in Zhengzhou, China," JPMorgan tech analyst Samik Chatterjee wrote. "While the rapid extension of lead times for the iPhone 14 Pro / Pro Max has slowed down and in fact began to moderate in recent weeks, it still remains elevated relative to the lead times seen prior to the COVID outbreak in Zhengzhou as we continue to see the supply shortfall continuing through year-end and impacting the typical seasonal uptick in iPhone volumes seen in Dec-Q."