By CCN.com: The U.S.-China trade war hasn’t been kind to Apple. The repeated threats and escalations on trade tariffs have shaken investor confidence.
In September 2018, both countries have implemented the third round of tariffs where the U.S. imposed an additional $200 billion tariffs on Chinese goods. China retaliates by implementing tariffs worth $60 billion on U.S. merchandise.
At that point, Apple’s shares began to crumble. The stock went from an all-time high of $233.47 in October 2018 down to $142 in December 2018. That’s when both countries decided to halt escalations. Though looks like China has announced a further $75 billion of tariffs on U.S. products today.
Apple is vulnerable to the trade war because the Chinese market generates a substantial amount of revenue for the tech company. The bad economy in China due to the trade tensions have made a negative impact on Apple’s sales in the country. In the first quarter of 2019, the company generated $13 billion in revenue from the Asian giant, which is down 27 percent year-over-year.
Nevertheless, tensions have eased between the two countries. This allowed the tech titan to regain its footing.
Apple Mildly Bullish After It Broke Out of a Bullish Continuation Pattern
On Aug. 13, 2019, the Trump administration announced that it will delay the imposition of new tariffs on Chinese goods including cell phones. The development boosted the price of Apple’s shares. This enabled the stock to break out of a symmetrical triangle pattern.
The breakout suggests the continuation of the stock’s uptrend. However, even with the technical breakout, it may be wise to delay buying the stock. Apple is not yet out of the woods yet. The current economic environment is so unpredictable that patience is key.
To completely recover its bullish outlook, Apple must convincingly take out resistance of $230. This would attract breakout buyers and momentum traders as a move above that level indicates the stock’s readiness to explore uncharted territories.
Cole Walton, the Head Trader of Kanos Capital Management and Co-Founder of Plouton Mining, supports our cautious stance. He said,
“215-220 has been a difficult area for the stock to push through, and the all-time high is right around 230, which does not leave much upside without having it make new highs in an environment where there are significant headwinds.”
Therefore, a solid strategy could be to wait for the tech giant to breach resistance of $230. This would likely erase doubts about the stock’s bullish nature and attract investors waiting on the sidelines.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.