Friday, May 21, 2010

Apple Below 50 Day SMA, Fundamentals Still Strong

AAPL


Overview
AAPL is down -4.53% for the week, down -7.19% for the month, up +14.99% for the year, and up an amazing +191.57% since the March 9, 2009 market bottom. This equates to -$11.50 for the week, -$18.77 for the month, +$31.59 for the year, and an incredible +$159.21 since the March 9, 2009 market bottom! Apple's market capitalization at $220.50B is now third largest in USA, behind Exxon and Microsoft. AAPL is approximately $14.72B below Microsoft's market cap of approximately $235.22B.

Apple Daily Chart
Below is the AAPL daily chart for 2010.

Noteworthy Closing Prices on Daily Chart below:
Current Close 242.32 (Higher yellow horizontal line)
2010 YTD & All Time High 4-23-10 270.83
YE 12-31-09 210.73
10 Month EMA 210.19 (Lower yellow horizontal line)


AAPL: Below 25 Day SMA




Intermediate-Term Trend
The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, generated a buy/long/bull signal on Friday, March 12, 2009. Therefore, AAPL is in an intermediate-term bull market and has remained so during the recent market pullback and related Flash Crash. That is, the 25d sma is higher than the 50d sma.

Resistance
The current closing price, the higher yellow horizontal line is below the 2010 YTD and all time closing high of 270.83 on April 23.  AAPL is at the sideways trading of April 12 and 13.  The only resistance above is recent.

Support
The most recent support is just below at the April 7 peak closing price of 240.60 and in that general time and price area.  There are multiple levels of support below this.

Moving Averages
The ongoing EU and Euro Crisis has pulled down high beta technology sector stocks.  AAPL is below the 25 day  and 50 day simple moving  averages.  Even through this recent market turmoil and Flash Crash, AAPL has so far remained above the 100d sma and also the 200d sma.  By comparison, the S&P 500, SPX, is below the 25d, 50d, 100d, and 200d sma's.  The 25d sma is descending while the 50d, 100d, and 200d sma's are still ascending.

Uptrend Line
The yellow uptrend line, a rate of price ascent, is from the January 20, 2009 closing low of 78.20 up through the February 4, 2010 closing low of 192.05. The February 4 closing low has been the bottom for 2010.  AAPL spiked decisively above this uptrend line on February 25. AAPL has now stayed well above henceforth (except for Flash Crash Thursday, May 6, 2010).

Downtrend Line
The downtrend line, a rate of price descent, is from the April 23, 2010 YTD and all time high of 270.83 down through the April 29, 2010 peak of 268.64. AAPL has stayed below this downtrend line.

Relative Strength Index (RSI)
RSI 14 day = 36.10 is oversold, lowest since 33.22 on February 8
RSI 28 day = 49.96 is reasonable; above bottom of 48.47 on May 20
The RSIs are signalling plenty of upside room.

MACD (12,26,9)
The MACD has been bearish since May 4 as the pullback, Flash Crash, and EU & Euro Crisis pulled the related ema's down.  The MACD has been downtrending.

Long-Term Trend
The lower horizontal yellow line is the 10 month exponential moving average from the monthly chart, which I have overlayed on this daily chart. That is the line in the sand, so to speak, for the long term signal of a bear market. AAPL is well above this signal at the current close, the higher yellow horizontal line. Therefore, AAPL is in a long-term bull market and has been since April 2009.

Conclusion
Through the recent pullback, Flash Crash, and EU & Euro Crisis, the fundamentals at Apple Inc. never changed.  Apple Inc. is doing great!  Apple has been charging ahead with the introduction of the iPad, iPad 3G, a new iPhone OS 4, a new mobile advertising platform (iAd), a new iPhone 4G to be launched in June, overall strong iPhone sales and market share, and now reports of very strong iPad demand. The current price is low based on AAPL fundamentals.  The RSI 14 day and 28 day are leaning oversold to reasonable.  The MACD is bearish.  The intermediate-term trend became bullish on Friday, March 12 and remains so. The long-term trend remains bullish.

Disclosure
We are long AAPL.


Apple News & Fundamentals


iPad
Over 1 million iPads have now been sold and the iPad is now outselling Macs.  Apple has begun shipping international preorders and will launch in 9 countries on May 28.  Apple launched the iPad, the Big Day, on Saturday, April 3.  Reviews of the iPad have been favorable overall with 91% consumer satisfaction, and 1 in 5 USA consumers plan on buying an iPad.  The App Store keeps adding iPad apps and the iBook store the same. Estimated 2010 sales of iPad range from 3 million units to 10 million units. It has been suggested that iPad sales might cut into iPhone sales some, but I don't believe this will have a material effect.  However, recent data suggests the higher margin iPad is cutting into lower margin iPod sales.  So far, no one has come out with a "second tablet" to compete with the iPad, although there are constant rumors a competitor is coming.

iPhone
The iPhone OS 4 was announced on Thursday, April 8 by CEO Steve Jobs. iPhone continues incredible sales and market share. The iPhone 4G will be launched on June 7.  The Q1 results for iPhone were outstanding and pump the profits into Apple Inc. Apple's share of global mobile Web browsing is at 67% from the iPhone and iPod Touch.  The iPhone is now beginning to dominate the Japanese smartphone market.

iAd
CEO Steve Jobs introduced the new personalized, mobile advertising system, iAd on April 8. This will compete directly, and replace, Google's advertising platform. I personally think this was a bigger announcement than the iPhone OS 4, that is, Apple is going inito the mobile advertising business. While iPad and iPhone sales will positively impact Q2 earnings, the iAd platform may well have a significant impact in future quarters as this revenue stream comes online.

Smartphone Wars
It seems everyone is suing everyone else now over smartphone patents!  Mobile computing  is  the future and smartphone sales are surging worldwide.  The stakes are high and the lawsuits, to hopefully at least obtain royalties, should continue indefinitely.  HTC, maker of Google Android phones, counter sued Apple this past week over patents.

CNBC: American Titans
CNBC has done a feature on Apple Inc., "Gadgets Galore", the week of May 10 in their American Titans series.  Click here for the commentary and analysis in this feature.

Quarterly Earnings
Q1 earnings were released on April 20 and AAPL beat on revenues, EPS, and outlook.  Numerous analysts raised price targets to $300+ within 48 hours.  Q2 will include iPad sales and should be another stellar quarter.


AAPL

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