(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Apple Inc. (AAPL) could be on the verge of a rebound based on a technical analysis of the trading chart. Shares have come under pressure recently, as investors turned negative on the iPhone super-cycle, and the broader market force turned negative, dragging the stock lower. But despite the recent declines, Apple is showing that it could be putting in a trading bottom, and may be set to rise over the coming weeks. (For more, see also: What Makes Apple So Valuable?)

Market volatility has been intense over the past couple of trading sessions, with the S&P 500 falling by over 4% since January 18. But, Apple has fared even worse, falling by nearly 9%, and by roughly 13% at its lowest point during the same time. However, the technicals are suggesting it reached oversold levels. 

^SPX Chart

^SPX data by YCharts

Oversold Levels 

The chart below shows how the relative strength index (RSI) reached oversold levels on the daily chart at a reading in the low 20s, a reading below 30 is considered oversold. But more importantly is that the last time Apple's stock was this oversold was in April of 2016 when the stock was trading at a price in the low 90s. The chart also shows that the stock has only hit these levels on a few occasions in recent years.

 

 

Strong Uptrend

Additionally, the chart shows the stocks has found support at an uptrend that traces its origins back to June of 2016. That uptrend is of critical importance, and if that trend should be broken then Apple could face even further declines. But the surge in volume to well above the 90-day moving suggests that there is a robust level of support for the stock at that uptrend. 

 

Strong Fundamentals

Even from a fundamental standpoint Apple now has a one-year forward price-to-earnings ratio of 12.4, which given the stock has roughly 14% year-over-year earnings growth, makes the shares of the stock relatively cheap—given the stock has a PEG ratio of less than 1. The stock hasn't seen its earnings multiple this low since early 2017, and that was after coming off a depressed level from the sharp market declines in early 2016. (For related reading, see: Apple Shares Officially In a Correction.)

 

Fundamental Chart Chart

Fundamental Chart data by YCharts

Apple's stock has been on a roller coaster ride over the past few weeks, but that could be about to change if the technicals and fundamentals have anything to say about it. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance. 

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