Apple Stock Plummets Amid Chinese iPhone Concerns

By Camilo Botia, CSC?

On Wednesday and Thursday, Apple's stock experienced a significant decline of over 7% due to emerging concerns about potential restrictions imposed by the Chinese government on the use of iPhones among officials in state-backed organizations and corporations.

Within just two days, Apple's market capitalization plummeted by approximately $200 billion, triggered by numerous reports speculating that Chinese government employees might face prohibitions on utilizing iPhones. The stock price tumbled from $189.92 on September 1st to $177.56 at the close of trading on Thursday. It's crucial to note that China is Apple's most significant foreign market, with Chinese sales contributing to roughly one-fifth of the company's overall revenue in the previous year.

Investors are expressing deep concern because such a ban could pose a more significant threat to Apple if it sends a message that ordinary citizens should opt for electronic devices manufactured by Chinese companies instead.

The stock price experienced a significant drop during the Wednesday and Thursday sessions, creating a bearish gap that has pushed Apple's stock to approach its support level at $171.96, its lowest point since May, retracing notably from its peak at $189.92 per share. At the upper end, its all-time high of $198.23 represents its second resistance level.

If the stock continues its downward trajectory and Chinese restrictions further curtail Apple product sales in the country, it could continue to establish new lows, eventually finding support around the $163.91 level, where its 200-day moving average resides.

With the assistance of the RSI indicator, we can observe that the market has room to reach new lows before displaying signs of oversold conditions, even though the recent bearish gap provided strong downside momentum to the indicator and brought it closer to the 0-30 zone.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

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