What Will Move Apple Stock In 2023
Top 3 themes for $Apple(AAPL.US$ stock in 2023: (1) the announcement of a mixed reality device, (2) resolution of Apple’s supply chain problems and (3) improvement in the macroeconomic landscape.
2023 will most likely be a good year for Apple stock only if it is also a good year for the S&P 500. And for this domino effect to play out, 2023 also has to be a much better year for the global economies – that is, lower inflation, stable rates and absence of a severe recession.
History shows that Apple stock usually dances with the rest of the market. This is evident in the high, positive correlation between AAPL and SPY, especially during times of market correction – which is the case today.
The chart below may deserve a couple of looks, as it packs quite a bit of information. Here is basically what it tells us:
1. While 30-day (calendar) correlations between AAPL and SPY can be a bit all over the place, the 180-day average correlation of +0.49 suggests that both tend to move together, either higher or lower, very often.
2. Correlations are the highest when the S&P 500 is in correction mode (i.e., 10% below all-time highs, indicated by the shaded grey areas). The correlation coefficient average during times of market distress is +0.61 vs. +0.49 across the entire 41 year period. This is probably because, when investors are generally bearish, they tend to buy and sell stocks in bulk, driven by the same sentiment and common market themes.
3. AAPL moved a bit more independently from the S&P 500 between the IPO year of 1980 and the mid-1990s, when Apple struggled with internal issues that almost led it to bankruptcy. The average correlation coefficient between 1980 and 1997 was +0.38.
4. Since 1998, first due to the “rising tide that lifts all boats” phenomenon of the late 1990s and then as Apple matured as a company, correlations with the S&P 500 moved much higher. The average of the past 24 years has been +0.56.
5. Today, the correlation coefficient of +0.87 is about the highest that it has ever been.
History shows that Apple stock usually dances with the rest of the market. This is evident in the high, positive correlation between AAPL and SPY, especially during times of market correction – which is the case today.
The chart below may deserve a couple of looks, as it packs quite a bit of information. Here is basically what it tells us:
1. While 30-day (calendar) correlations between AAPL and SPY can be a bit all over the place, the 180-day average correlation of +0.49 suggests that both tend to move together, either higher or lower, very often.
2. Correlations are the highest when the S&P 500 is in correction mode (i.e., 10% below all-time highs, indicated by the shaded grey areas). The correlation coefficient average during times of market distress is +0.61 vs. +0.49 across the entire 41 year period. This is probably because, when investors are generally bearish, they tend to buy and sell stocks in bulk, driven by the same sentiment and common market themes.
3. AAPL moved a bit more independently from the S&P 500 between the IPO year of 1980 and the mid-1990s, when Apple struggled with internal issues that almost led it to bankruptcy. The average correlation coefficient between 1980 and 1997 was +0.38.
4. Since 1998, first due to the “rising tide that lifts all boats” phenomenon of the late 1990s and then as Apple matured as a company, correlations with the S&P 500 moved much higher. The average of the past 24 years has been +0.56.
5. Today, the correlation coefficient of +0.87 is about the highest that it has ever been.
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