Looking back at my most recent articles on Apple stock (AAPL) – Get Apple Inc. Report, one clear theme emerges. I have spent much more time discussing historical price movements and volatility than company-specific developments involving the iPhone or similar topics.
At the risk of sounding like a broken record, I am still compelled to argue that, for now, all that matters for AAPL share price is the macroeconomic landscape – more specifically: inflation, interest rates, and economic activity.
Below, I elaborate further on why I think that, in the short term, traders and investors should set aside company fundamentals and stay laser-focused on the direction of consumer prices and the actions taken by the global central banks to stabilize them.
Figure 1: Apple Stock: This Is The Only Thing That Matters, For Now
(Read more from Apple Maven: Apple Stock: Fears Are Overdone, Say These Analysts)
AAPL: all about the economy
On Thursday, October 13, I talked about the intraday swing in AAPL. From the low of the day to the high, Apple stock moved by nearly 7%, or $160 billion in market cap. My main conclusion was not that bulls were ready to take over, but that volatility would likely remain very high.
So, what happened on Friday? Between the high and the low of the day, shares moved nearly 4% – except this time, they sank rather than climbed (see below). To reinforce, the erratic stock price behavior is very consistent with a frantic, highly volatile stock market.
Figure 2: AAPL’s performance on October 14 trading session.
Also notice above how the moves in AAPL almost perfectly mirrored the ups and downs of the S&P 500 (SPY) – Get S&P 500 ETF TRUST ETF Report in general. Clearly, whatever drove the equity market’s upticks and downticks were also responsible for Apple stock’s wild ride.
This is the telltale sign that what matters to AAPL now is not the iPhone 14 cycle, how strong service revenues will be in fiscal Q4, or expectations for Apple’s entry into the mixed reality space. The only topic of conversation, for now, is the economy.
Apple stock gone wild: other examples
I have recently given one other example of when Apple moved wildly within the same trading session over the past decade. On August 24, 2015, AAPL climbed as much as 16% from the bottom in a matter of hours.
The dominant topic of discussion at that point was the rare economic growth deceleration in China. Sure, Apple was very exposed to this important Asian market, but the developments were barely company-specific. In fact, NBC called the economic slowdown “the biggest business story of 2015“.
Another good example is March 2020. During the month, AAPL swung by at least 7% within a single trading day, like it did last Thursday, five times. We all know what was going on back then: the start of the COVID-19 crisis, an event that impacted the entire global economy.
The other remarkable case happened on December 26, 2018. On relatively low trading volume compared to the early pandemic days, Apple stock jumped roughly 7% between the intraday bottom and the top.
Back then, the market was reacting negatively to monetary tightening, following about 8 years of zero rates since the Great Recession. Again, this was a macroeconomic event, not a company-specific one. The hopeful news is that AAPL rebounded strongly shortly thereafter.
The key takeaway: brace for turbulence
I don’t want to convey that Apple’s business fundamentals are not important. They are, for the long-term investment thesis. They may even be important briefly in the short term – for example, AAPL could rally for a day on the back of drop-the-mic earnings results, which the company is scheduled to deliver in about 10 days.
But for now, all that matters is the macroeconomic landscape. This is why I reinforce my belief that AAPL will continue to bounce off the walls for several days or weeks. Bold and patient investors may feel compelled to buy the fear, but risk-avoiding traders should be extra careful.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
