Sunday, July 18, 2010

Apple Drops Below 50 Day Average (Charts)

AAPL


*** Apple: FY Q3 Earnings Conference Call Is Tuesday, July 20, 5:00 p.m. EDT *** 


Overview
The short story is AAPL has pulled back, below the 50 day simple moving  average, on both iPhone 4 antenna conerns and overall market concerns about the USA economic recovery. to close at $249.90 this week or -$9.72. Current Apple News & Fundamentals will be updated later. Apple reports quarterly earnings this Tuesday, July 20. See the Latest Blog Posts and Blog Archive for the latest on the iPhone 4 antenna issue and the press conference by Steve Jobs on Friday to address the problem. See the Twitter posts for additional news. Below is a technical review of AAPL stock.

The long story is AAPL is down -3.74% for the week, down -0.65% for the month, up +18.59% for the year, and up an amazing +200.69% since the March 9, 2009 market bottom. This equates to -$9.72 for the week, -$1.63 for the month, +$39.17 for the year, and an incredible +$166.79 since the March 9, 2009 market bottom! AAPL at the July 16 close of $249.90 is -8.82% and -$24.17 from the all-time closing high of $274.07 on June 25.

By comparison, the overall market, the S&P 500, is down -1.21% for the week, up +3.32% for the month, down -4.50% for the year, up +57.40% since the March 9, 2009 market bottom, and down -12.52% from the 2010 YTD high on April 23. AAPL is outperforming the overall market long-term but has underperformed short-term, in July, due to the iPhone 4 antenna issue..

Apple News and Fundamentals
A review and weekly update of Apple Inc. news and fundamental analysis will be posted later. A review and weekly update of USA and World market and economic news and fundamental analysis is here. The IMF issued a partial update of their semi-annual World Economic Outlook as of June 30 which is reviewed here. The full semiannual World Economic Outlook issued in April is reviewed here. In summary, the IMF sees the world economic recovery continuing. Sentiment is "cautiously optimistic" perhaps leaning to "extremely cautious optimism" about the global recovery but it appears a second half 2010 slowdown is in progress for the world and the USA.

Apple Daily Chart
Below is the AAPL daily chart for 2010. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below
Current Close $249.90 (Yellow horizontal line)
2010 YTD & All Time High 6-18-10 $274.07
2010 YTD Low 2-4-10 $192.05
YE 12-31-09 $210.73
10 Month EMA $225.33


AAPL Drops Below 50 Day Average on  iPhone Antenna and Market Concerns


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 Wednesday, June 23. A bear signal had been in effect since June 10. AAPL previously had been in a bull market since March 12, 2010. Currently the 25d sma is remains higher than the 50d sma.

Resistance
AAPL dropped below the 50 day simple moving average on Tuesday, July 13 and has remained below. The 50 day sma is now resistance at 255.54. The recent July 9 peak of 259.62 is the next resistance above the 50d sma. Above that peak, noteworthy prices are the May 12 closing peak of 262.09 and June 2 peak of 263.95. Surpassing these two prices clearly places AAPL up near the lofty all-time highs. Then the key resistance and benchmark prices above are the earlier 2010 YTD and all-time high on April 23 of 270.83 and the new all-time high on June 18 of 274.07.

Support
The recent July 2 trough of 246.94 is an important benchmark. The April 15 peak of 248.92 and the latest pullback trough of 246.94 on July 2 are also support. The 100 day simple moving average of 245.78 is then just below - AAPL has not been below since February 23, 2010!

Moving Averages
AAPL is now below the 25 and 50 day simple moving averages and above the 100d and 200d sma's. The 25d sma continues above the 50d, 100d, and 200d sma's but has leveled off. The 50d sma is descending. The 100d and 200d sma's continue to ascend.

Short, Higher Uptrend Line
This recent short, higher, yellow uptrend line, a rate of price ascent, illustrates that AAPL has been putting in higher lows during recent pullbacks. The uptrend line is from the May 7 dip and closing low of 235.86 up to the May 20 dip and closing low of 237.76. The later dips and closing lows of 243.20 and 246.94 on June 9 and July 2, respectively, have been higher lows. AAPL at 249.90 has not yet tested the most recent low of 246.94 on July 2. This continues as a bullish and encouraging indicator for AAPL.

Long, Lower Uptrend Line
The long, lower, yellow uptrend line, a rate of price ascent, is from the AAPL 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 24. AAPL has now stayed well above henceforth (except for a downward intraday pin on Flash Crash Thursday, May 6, 2010).

Downtrend Line
A downtrend line, a rate of price descent, has been created by the pullback from the June 18 all-time high. This downtrend line is from the June 18 all-time closing high of 274.07 down through the June 22 sub-peak of 273.85. AAPL has stayed below since.

Relative Strength Index (RSI)
RSI 14 day = 32.63 is oversold and just above the new YTD low 28.70 on July 13
RSI 28 day = 49.49 is reasonable and about mid-range of recent highs and lows
The RSIs allow for plenty of upside room.

MACD (12,26,9)
The MACD remains bearish since June 29 and is steady. The 2010 peak was +2.49 on March 10 and 2010 low was -3.55 on May 7. Previously the highest was on November 4, 2008 at +3.41.

Volume
AAPL traded 37.1M shares on Friday, July 16. The 20 day moving average is approximately 27.4M. Volume was above the 20d mva this past week due to the iPhone 4 antenna issue and general market concerns over the USA economic recovery.

Long-Term Trend
The 10 month exponential moving average of 225.33 is a long-term trend indicator and shown on the monthly chart below. 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. AAPL is in a long-term bull market and has been since April 2009.

Conclusion
The iPhone 4 antenna issue has created uncertainty with AAPL. The next couple of weeks should see this issue settle down as Apple provides iPhone 4 purchasers with free bumpers to solve the problem. Through recent disappointing USA economic data, the overall market pullback, uncertainty over the USA economic recovery, the Flash Crash, and the EU & Euro Crisis, the fundamentals at Apple Inc. have been great. Apple reports quarterly earnings this Tuesday and hopefully will get pop from great financial results.

Apple has been charging ahead with the introduction of the iPad, iPad 3G, a iPhone 4, iOS 4, and a new mobile advertising platform (iAd). iPhone sales and market share are impressive and now there are reports of very strong iPad demand. "Apple is beginning the strongest product cycle in the company's history, led by the iPad and iPhone 4", stated Deutsch Bank on June 22. The current price has not caught up with AAPL fundamentals. The RSI 14 day and 28 day allow plenty of upsdie. The MACD has been bearish this month. The intermediate-term price trend continues bullish. The long-term price trend remains bullish.


AAPL Monthly Chart

Below is the monthly AAPL chart since January 2005. The overall analysis and commentary is the same as for the daily chart above. The yellow horizontal line, the current price, and the yellow uptrend line are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average, which is the long-term bull or bear market signal, as discussed above with the daily chart.



Disclosure
We are long AAPL.


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