Apple is testing a key 200-day level — if it breaks, look out below

Apple CEO Tim Cook
Josh Edelson | AFP | Getty Images
Apple CEO Tim Cook

While the broader market sold off Monday, extending its losses from the prior session, Apple managed to stay positive. In fact, the stock rose more than 1 percent while the Nasdaq composite sank 2 percent.

Still, the tech giant's technical picture appears increasingly ugly.

Last week, I highlighted for clients that the 100-day moving average was a key level to watch. Once the stock broke that line, it fell sharply, with some obvious help from the big decline in the broader market.

Now, it is already testing its 200-day moving average. That, too, has been a key line to watch.

In late 2015 and early 2016, that moving average provided some very tough resistance. Once the stock broke above that line in mid-2016, that old resistance became new support (as the technical analysis adage goes) and the stock bounced off that line twice in the second part of the year.

Therefore, it should provide some support here (and is likely why the stock is acting better than the broad market Monday).

Of course, if it breaks below that line at any point in the future, it should lead to another drawdown, but it looks as if the 200-day moving average wants to stymie that decline for now.

Remember, Apple had already been declining before the broad market rolled over last week, and thus the stock is more oversold than the S&P 500 right now in the short term.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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