Apple shares raced into July.
The stock surged 2% on Monday, adding to a nearly 30% advance for the year, after a pause on additional tariffs between the U.S. and China reignited hopes of trade progress.
Its rally now faces a major test, says Matt Maley, equity strategist at Miller Tabak.
"It's at a key technical juncture right now, at least on an intermediate-term basis, because this huge rally it's seen this year, especially the most recent one, which is about 16% in just one month, has taken it right up to the upper line of what's called a symmetrical triangle pattern on a multi-year basis," said Maley on CNBC's "Trading Nation" on Monday. "If it can break above that it's going to be bullish for the stock."
Apple would need to reach at least $210 to break out above the upper band of its symmetrical triangle pattern. That marks a roughly 4% rally from its current level at less than $202.
"However, the more important level is going to be the early May highs. That's up right around $212. You break above that, not only will you get a break of the triangle pattern, but you'll have a nice higher low, higher high sequence which should give this stock another leg higher," said Maley.
"The problem is when you're at key technical junctures the thing can fail when you hit a resistance and it rolls back over. If that happens we've got a big problem," said Maley.
Its stock will have seen a failed rally and breakout if it touches those May highs at $212 and then breaks back down again, he explains.
Chad Morganlander, portfolio manager at Washington Crossing Advisors, says concerns linger for Apple and similar large-cap tech and growth stocks.
"Overall trade concerns are a major concern for this company as well as global growth concerns so that's the reality with this company," said Morganlander during the same segment. "Although it's cash and debt neutral, that cash has been eaten up by stock buybacks that have given it this illusionary effect of earnings growth. Again, we would like to see organic earnings growth, organic revenue growth, and this is one that doesn't show the earmarks of that."
Apple is expected to post negative earnings growth in its second, third, and fourth quarters, according to FactSet estimates. Analysts expect earnings to contract by 4% in fiscal 2019.