Apple shares show signs of recovery this morning after closing below a key support level on Tuesday. It appears as if a bearish technical pattern is emerging on the company’s stock chart. On Tuesday, Apple shares closed at $118.44 per share, which was below the 90-day support level. This morning, however, shares of AAPL rose as much as 1.88% to $116.80 per share.

Apple Inc. (AAPL) Stock: Bearish Tech Pattern Emerging

Apple (AAPL) chart seeing rectangle top?

Bank of America Merrill Lynch analysts Stephen Suttmeier and Jue Xiong noted that with Apple shares trading in the $122 to $119 per share range, the focus is lower at between $107 and $102 per share. As a result, they’re concerned that Apple’s stock chart is forming a rectangle top lasting more than five months. The BAML team echoed similar warnings about relative underperformance in Apple shares made by Eric Bush of Gavekal Capital.

A rectangle top suggests that supply and demand for shares are roughly in balance as the stock trades in a relatively range-bound pattern.

As you can see, Apple shares closed below the 200-day MA on Tuesday based on a 90-day breakdown:

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The BAML team notes that the closure of Apple shares below that key support level demonstrates the bearish technical pattern on the company’s stock chart. Further, they said it suggests that more downside to Apple stock is likely.

They say support now comes in at $106.35 per share and the $102 area.

Second half may be hard too

Apple’s bearish stock chart is just part of a wider problem across the U.S. stock market. Looking more generally across the market, the BAML team notes that the second half of the year will be just as lackluster as the first half. They compiled and analyzed data all the way back to 1928 to come up with these percentages.

They note that the average return for A&P 500 companies was 0.2% for the first half of the year, which is far below the historical average. The analysts also point out that the average return for the second half of the year is 3.9% and that the S&P 500 Index is up 66.7% of the time.

However, when the index’s performance in the first half of the year is lower than the average, the index is up 57.1% of the time in the second half of the year. In this case, the average return in the index is just 1.42%. And on the other hand, when the first half of a year brings a return that’s higher than the average, the average return for the second half of the year is 6.22%, and the market is up 75.6% of the time in the second half.