Apple Stock Chart: AAPL 7-week rally buoyed by iPhone, but CCI pointing to downswing

• AAPL shares may complete a 7-week rally this week.
• The company has asked suppliers to increase iPhone deliveries by 20%.
• Apple stock is near top of weekly trend line.

On the weekly chart, Apple (NASDAQ: AAPL) stock has gained seven weeks in a row – that is if it can retain this week’s gains today and tomorrow. Recent rumors of a 20% increase in iPhone production boosted the stock yet again on Wednesday. AAPL will soon run into the top of its weekly trend line channel, and prior extreme high readings on the Commodity Channel Index (CCI) have led to swing lows.

Apple stock news: the usual more good news on top of existing good news

News got out on Wednesday that the casino from Cupertino had asked suppliers to prepare for a 20% increase in iPhone components for this year. AAPL stock closed up 2.4% at $149.15 on Wednesday, and has been slightly higher in the premarket on Thursday. Apple sold 194 million iPhones in 2020, and analysts were already predicting 230 million units to be sold in 2021. This new rumour would mean Apple sees enough demand to manufacture upwards of 40 million more handsets than predicted. On Tuesday, Apple also announced that it would be teaming up with Goldman Sachs to enter the “buy now, pay later” credit business that has up until now mostly been dominated by Affirm Holdings (NASDAQ: AFRM).

Though weekly winning streaks typically do not last this long without a pullback, Apple is only trading at 33.5 times 2020 earnings and about nine times sales. You can say a lot about AAPL stock, but it is hard to make the argument that this $2.5 trillion behemoth is overvalued with the sheer amount of free cash flows and repetitive share buybacks at its disposal. Now at an all-time high, AAPL stock’s near term future is uncertain, but its long-term future appears extremely stable. Afterall, one of the most followed stocks in the world beat analyst EPS estimates by 40% in Q1.

AAPL chart: technicals point to resistance at top of channel

The weekly chart is your friend. Here it is unmistakable that Apple will most likely finish another green candle this week to make it seven straight weeks of higher prices. This is a rather unusually long streak, but the powerhouse has kept this up for at least nine weeks once in the past three years. The ascending price channel has held up AAPL since August 2020, which means it does deserve at least some respect. At $149.15, Apple shares are nearing the top of the trend line, which at the time of writing appears close to $153.34. Expect the stock to at least face resistance here and more likely begin a correction here as shorts enter positions and longs take profit.

On the downside, trend line support sits at $131, but there should also be some support between $135 and $137 from January and April. Below there the 20-week Simple Moving Average (SMA) at $129.92 could also provide sustenance, although AAPL shares have paid it little mind this year. The 50-week SMA at $125.20 could also be supportive but has not been put to work in that capacity since the COVID-19 crash of March 2020. Last but not least, the CCI reading of 211 places AAPL stock at historically overbought conditions. The last two times the reading was anywhere near this level, the stock dipped into downswings. Addtionally, volume has been light over the past two months, giving the downswing thesis even more ammunition.

AAPL weekly chart