What to Expect After the Apple Winning Streak

Apple stock hasn't rallied this much in seven days since 2015

Jul 18, 2017 at 10:04 AM
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The shares of iPhone maker Apple Inc. (NASDAQ:AAPL) just notched a seventh straight win on Monday, on pace with the broader Nasdaq Composite (COMP), and marking their longest stretch of consecutive gains since October. Against this backdrop, we took a look at how Apple stock tends to perform in the wake of seven-day winning streaks.

AAPL stock added about 4.8% in the past seven sessions, ending yesterday atop its 50-day moving average for the first time since the tech sector sell-off on June 9. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, this marks Apple shares' best seven-day stretch since February 2015, when the stock added 8.23% during its winning streak. Apple's longest winning streak ever was in the second quarter of 2003, with the stock surging nearly 40% in 12 sessions.

However, it's worth noting that AAPL's last two winning streaks were halted at seven sessions, with the shares ending lower on the eighth day. In early action today, Apple shares are down 0.5% at $148.81. 

Apple stock after winning streaks

Since 2010, Apple stock has enjoyed 14 winning streaks of at least seven days. The shares tend to drop on Day 8, losing 0.05%, on average, and finishing higher just 42.9% of the time. That's below the stock's average one-day return of 0.1%, with a win rate of 52.5%, going back to 2010. In similar fashion, AAPL stock has averaged a two-week loss of 0.13% after a seven-day win streak, though it was higher more than half the time.

However, looking out one and three months after a seven-session winning streak, Apple stock tends to outperform. A month after a streak, AAPL shares were up 3.3%, on average -- that's compared to an average anytime one-month return of 2.07%. Plus, the stock was higher 64.3% of the time a month after a win streak, compared to 60.2% anytime. 

Three months after a seven-day rally, AAPL stock was up a whopping 9.75%, on average, compared to a typical anytime three-month return of 6.5%, looking at data since 2010. What's more, Apple stock was in the black 85.7% of the time three months after a win streak, compared to 70.4% anytime.

aapl stock after win streak since 2010

In conclusion, if past is prologue, Apple shares could be headed toward record highs by the end of 2017. Further, the stock's Schaeffer's Volatility Scorecard (SVS) of 95 indicates that Apple shares have handily exceeded options traders' volatility expectations in the past year. However, speculators looking to play a continued AAPL rally should note that volatility expectations -- and, thus, short-term options prices -- will likely escalate into Apple Inc.'s quarterly earnings release, scheduled for early August.

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