Is Apple Stock Poised To Rise After Declining 10% Over The Last Month?

by Trefis Team
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Apple stock (NASDAQ: AAPL) has declined by around -11% over the last month and currently trades at about $122 per share. There are a couple of factors driving the correction. Firstly, rising bond yields have likely taken some sheen off mega-cap tech stocks that were viewed as a safe haven through Covid-19. Moreover, with Covid-19 vaccinations picking up pace, investors are likely betting on a swifter economic recovery, rotating to more cyclical sectors. So will Apple stock continue its downward trajectory in the coming weeks and months, or is a rally looking more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for Apple stock average close to 1.8% in the next month (21 trading days) after experiencing an -11% decline over the last 21 trading days. However, the stock is likely to underperform the S&P 500 over the next month, with an expected return that would be –0.8% lower compared to the S&P 500.

But how would these numbers change if you are interested in holding AAPL stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test AAPL stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF AAPL stock moved by -5% over five trading days, THEN over the next 21 trading days, AAPL stock moves an average of 2.4%, which implies a return that is about 1% ahead of the S&P 500.

More importantly, there is a 58% probability of a positive return over the next 21 trading days and a 55% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of AAPL Stock Movements:

Question 1: Is the average return for Apple stock higher after a drop?


Consider two situations,

Case 1: Apple stock drops by -5% or more in a week

Case 2: Apple stock rises by 5% or more in a week

Is the average return for Apple stock higher over the subsequent month after Case 1 or Case 2?

AAPL stock fares better after Case 1, with an average return of 2.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.2% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Apple stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?


If you buy and hold Apple stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For AAPL stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?


The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although AAPL stock appears to be an exception to this general observation.

AAPL’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Apple stock by changing the inputs in the charts above.

While Apple stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for iRobot vs. Emergent Biosolutions shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

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