Apple Intelligence plus hedge funds may push Apple stock even higher
Apple’s share price is surging this week, thanks to Apple Intelligence, the artificial intelligence features it announced at WWDC. Hedge funds might be helping, too — and both factors can push Apple stock even higher.
Shares of the smartphone giant are “getting a delayed boost from the [Worldwide Developers Conference] Apple Intelligence launch,” wrote Bear Traps newsletter author Lawrence McDonald in a Wednesday note. “For over a month, people have been discussing the artificial intelligence upside for Apple, starting another supercycle for iPhones.”
McDonald added in his note that a hedge fund has been unwinding a large long Nvidia/short Apple pair trade… With Apple back as an AI play, that trade needs to unwind—which means buying Apple and selling Nvidia. How much more unwinding is left to do is hard to say.
The amount of Apple stock sold short relative to the amount available to trade is about 2.3%, according to Bloomberg. That’s high for Apple— and the short covering needed to return things to normal is about 10 to 20 million shares. That could be all done: Apple stock has traded almost 300 million shares over the past three days.
Fairlead Strategies founder and market technician Katie Stockton has an idea where Apple stock can trade, though. She says that if Apple can stay above $198 a share in the coming few days, then it will soon trade at $240. Stockton isn’t making a fundamental call on Apple stock; technicians look at charts and patterns to get a sense of where things can go over the short and medium terms.
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