Apple's chart looks like it could be ready for a massive rally: Strategist

Apple tanking, but two market watchers are betting on a bounce

Apple shares just had their worst day in six years, but I'm not worried.

The tech giant tanked 10 percent on Thursday after a shock warning on fiscal first-quarter guidance and the effects of a China slowdown. It is now down more than 39 percent from a record high set in October.

But on a technical basis, the stock is getting ripe for a bounce (at least over the near term). After its 39 percent decline in just three months, Apple's weekly relative strength index chart is the most oversold it has been since the credit crisis, falling to around 30.

Also, it is getting close to testing its 200-week moving average. That line provided excellent support for the stock a couple of times in both 2016 and 2013. We'd also note that even in 2008, Apple didn't break very far below its 200-week moving average when the broad market was in the last months of the horrible bear market.

Of course, this does not mean that it cannot break this line in a meaningful way eventually as it did during the dot-com crash. However, the odds that it will hold on its "first test" are quite high, especially given how oversold the stock has become.

When the stock last touched its 200-week moving average in July 2016, it rallied 70 percent over the following 12 months.