Apple Inc's (NASDAQ:AAPL) recent rally may face turbulence in the new year, according to a note from BTIG. The world's largest company has logged five consecutive weeks of gains over 2%, a streak last seen in 2010.
Historically, such streaks have been followed by weak performance. BTIG notes that Apple’s average one-month return after similar rallies since 1990 has been negative 6%, with only one positive outcome in 2009.
“There has been massive dispersion below the surface coinciding with a surging dollar and rates, and last week's drawdown was likely a shot across the bow,” analyst wrote.
With Apple nearing a $4 trillion market cap, the analyst urged caution heading into January, citing broader market challenges. Rising U.S. dollar strength and 10-year yields nearing year-to-date highs could weigh on large-cap growth stocks like Apple.
While the S&P 500 is poised to close the year strong, with a potential new high above 6100, BTIG sees downside risks in January as market volatility resurfaces.
“If the SPX does make new highs, there are going to be massive divergences in breadth and momentum, which is another red flag as we get into January.”
