Apple shares broke out in September of 2019 and the uptrend in the large cap technology stock has continue to perpetuate. The share price has been upgraded multiple times by several analysts who are now focusing on the iphone 11, and Apple TV+. The upgrades in the share price is creating a one way trend that is making it difficult to buy and a pull back to trade stocks.
The Latest Upgrades of Apple Shares
In January there have been several upgrades to the share price. In the first 2-weeks of January, Canaccord Genuity cited Apple’s strong installed base and strong iPhone demand while UBS analysts said anticipation for 5G phones works in the company’s favor. Both companies reiterated buy ratings on Apple shares, but each raised their price targets to $355, up from $275 and $280 per share. Morgan Stanley also upgraded their price target on Apple shares to $368, which is a 14% price increase from mid-January levels.
The acceleration in share upgrades has been matched by the upward trend in prices. Prices have surged in 2020, rising more than 7% in mid-January of 2020. The acceleration in prices has pushed the relative strength index (RSI), into a warning area. When prices moved to far to fast, an oscillator such as the RSI can give you a historical reference based on past acceleration. When the RSI prints a reading above 70, the resent price movement is considered overbought.
When the RSI indicator shows a level below 30, is represents a period where the market is oversold and could reverse. The current reading of the RSI is 76, above the overbought trigger level which could foreshadow a correction. The RSI has been above that level to a high of 89 recently which means prices could remain overbought for an extended period.
Alphabet Has Also Been Getting Upgrades to its Share Price
Alphabet has also broke out and its trading in an uptrend likely due to accelerating upgrades of their share price in January. Canaccord Genuity announced it’s upgrading Alphabet stock, from hold to buy and assigning the shares a $1,250 target. The stock price has rallied more than 8% so far in January. Pivotal Research Group also upgraded Alphabet to buy from hold and increased his price target to $1,650 from $1,445. The reasoning was the increase in the revenue streams that were likely to occur under new CEO Sundar Pichai who became CEO of Google and Alphabet, on December 20 following the departures of cofounders Larry Page and Sergey Brin. Under Pichai, there is likely to be a change in guidance philosophy, and a potential to change capital-allocation strategies which could drive revenues.
The stock price has been accelerating and similar to Apple the relative strength index is printing a reading of 76, above the overbought trigger level of 70 which could foreshadow a correction.