Apple Inc.’s Recent Rally May Face Turbulence in the New Year, Says BTIG
Apple’s recent rally, which has seen the stock log five consecutive weeks of gains over 2%, may face turbulence in the new year, according to a note from BTIG. The company, the world’s largest, has not seen a similar streak since 2010.
Historically, such streaks have been followed by weak performance, with Apple’s average one-month return after similar rallies since 1990 being negative 6%, with only one positive outcome in 2009. BTIG notes that Apple’s strong gain is not entirely justified by its underlying fundamentals.
There has been massive dispersion below the surface, coinciding with a surging dollar and rates, and last week’s drawdown was likely a shot across the bow. The analyst urges caution heading into January, citing broader market challenges.
Rising U.S. dollar strength and 10-year yields nearing year-to-date highs could weigh on large-cap growth stocks like Apple. While the S&P is poised to close the year strong, with a potential new high above 6100, BTIG sees downside risks in January as market volatility resurfaces.
If the S&P does make new highs, there will be massive divergences in breadth and momentum, which is another red flag as we get into January.