Saturday, December 18, 2010

Apple Continues at Resistance (Charts) *Remains above $320* AAPL


Apple Inc. reported a calendar Q3 2010 gross profit margin of 36.9%, which disappointed some, but was above guidance
Apple reported a record $20.3B in revenues resulting in $4.3B in net income
Calendar Q4 2010 is expected to be even better

Apple Overview

AAPL Apple an set all-time closing high on Monday, December 13 of $321.67 and then remained just below for the week. Apple was barely up this past week to close at $320.61 on Friday, December 17, 2010. AAPL was up a mere +0.02% for the week, is up a +3.04% for December, is up an incredible +52.14% for the year, and is up an astronomical +285.77% since the March 9, 2009 market bottom. This equates to +$0.05 (a whole nickel!) for the week, +$9.46 for December, +$109.88 for the year, and +$237.50 since the March 9, 2009 market bottom. AAPL is down -0.33% and -$1.06 from the 2010 YTD and all-time closing high of $321.67 on Monday, December 13. Apple has closed above $300 for 47 consecutive trading days and above $320 for 8 of the past 10 days. AAPL finished November up +3.38%, after gains in October +6.07% and September +16.72%.

S&P 500 By comparison, the overall market, the S&P 500, was up +0.28% for the week, is up +5.37% for December, is up +11.55% for the year, and is up +83.87% since the March 9, 2009 market bottom. SPX closed at a YTD and multi-year closing high of 1243.91 on Friday, December 17, 2010, the highest close since the September 19, 2008 close of 1255.07. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperforming the market for 2010, outperformed the market in September, October, and November, but is lagging in December. A review of the S&P 500 is here [S&P 500 at Another 2+ Year High! (Charts) *567 point rally in 648 days*].

Apple News and Fundamentals Apple reported record revenues and net income for Q3 2010, which are reviewed and analyzed on this blog.. Q4 2010 is expected to be even better. Current Apple financial  data, charts, and review is at the Apple Financial Performance page, updated for the latest calendar Q3 results reported on October 18. A review and analysis of the most recent Q3 earnings call has been posted at the Apple Earnings Conference Call page. Our valuation and target price of AAPL stock is posted at the Apple Stock Valuation page. On Wednesday, October 20, the all-new MacBook Air was unveiled along with updates for the iLife suite, FaceTime for Mac, and a peak at the next OSX upgrade, Lion. Apple launched in September both the iPad and iPhone 4 in China, the world's largest  Internet market  with a growing consumer base with disposable income. On September 1 with the Apple Special Music Event, CEO Steve Jobs launched new iPods, iTunes, iOS, and Apple TV. A summary and review of these announcements is posted here (Steve Jobs Unveils New iPods, iOS, iTunes, TV) and here (Apple Announces New iPods, iTunes, iOS, TV). Earlier, Apple launched the iPhone 4 in late June and the iPad in early April. International sales accounted for 52% of revenue in the latest quarter reported.

Economic and Market News Information about the USA and world economies plus the USA financial system are posted at Boom Doom Economy and Financial Controls.

Apple Continues at Resistance, Remains Above $320

AAPL Daily Chart Below is the AAPL daily chart since October 13, 2010 to illustrate just the applicable price interactions with the current close, resistance, and support. There are no previous price interactions, Apple has never traded this high before, above $300 and now $320. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below
Current Close: $320.61
2010 YTD and All-Time High, December 13: $321.67
2010 YTD Low, February 4: $192.05
YE December 31, 2009: $210.73

* The 100 and 200 day simple moving averages and the uptrend line are not shown on the daily chart this week *

Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, generated a buy signal on Tuesday, September 21. That is, the 25d sma is greater than the 50d sma. The relationship between these two moving averages is a lagging indicator. The 25d sma (not shown on chart) is slightly ascending and the 50d sma continues ascending sharply.

Resistance The all-time closing high of 321.67 on December 13 (highest yellow horizontal line on the daily chart above) and the related intraday highs of 322.33, 323.99, 322.50, 325.06, 322.54, 323.00, 322.61, and 321.79 on December 6, 7, 9, 13-17, respectively, are current resistance. AAPL pins through intraday to new highs, but then pulls back by closing.

Support AAPL surpassed 300.00 for the first time in history on October 13 and now has remained above 300.00 for 47 consecutive trading days, so there are multiple levels of support below. The $320 area (middle yellow horizontal line on the daily chart above) is first support. This corresponds with the December 6 and 9 closings of 320.15 and 319.76, respectively. Next support is the 318.00 area (lowest yellow horizontal line on the daily chart above). This corresponds with October 18, November 10, and December 2 closings of 318.00, 318.03, and 318.15, respectively. Additional support is below, all the way to the benchmark and psychological 300.00 area. Support was found at 300.00 on October 13, 14, 19, 28, 29 and November 16, 17 to continue above 300.00.

Moving Averages AAPL is above all the simple moving averages monitored: the 20, 25, 50, 100, and 200 day (only the 20d and 50d sma's are shown on the daily chart above). All are ascending. Each is above any longer term average. These moving averages are spread out in a bullish fan.

Uptrend Line (not shown on chart) The yellow uptrend line, a rate of price ascent, is from the January 20, 2009 cyclical closing low of 78.20 up through the February 4, 2010 YTD closing low of 192.05. The January 20 closing low has been the bottom for 2010. AAPL dropped below this trendline on August 23, but regained it on September 3 and now has been above since.

Downtrend Line AAPL is just below the recent all-time closing high of 321.67 on December 13 and there is no significant downtrend line in play.

Relative Strength Index (RSI) The RSI 14 day = 56.92 is reasonable. descending, and below the recent highs. The multi-year and 2010 high was 97.49 on September 16. The 2010 YTD low was 21.49 on August 24. The RSI 28 day = 51.27 is reasonable, descending, and well below the recent highs. The 2010 peaks have been 84.63 and 83.79 on April 5 and April 23, respectively. The 2010 low was 38.25 on August 31. Both RSIs continue reasonable, with upside room, due to the recent narrow trading range.

MACD (12,26,9) The MACD = -0.15, is downtrending, and has been negative for 2 days. The September 22 MACD of +3.16 is the 2010 YTD high. The 2010 low was -3.55 on May 7. Previously the highest was on November 4, 2008 at +3.41.

Volume Volume was 13.8M on Friday, December 17, which is below the descending 20 day moving average of approximately 13.9M. The 20d sma peaked right after the calendar Q3 earnings report on October 18. The 50d sma is approximately 17.2M and descending.

Long-Term Trend The 10 month exponential moving average of 272.38 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 AAPL led the way during the USA September Stock Market Rally and continued to do so in October up to the calendar Q3 earnings report on October 18. Even with record revenues and net  income, expectations were so high Apple did not confirm the 318.00 close before the earnings announcement and pulled back. We believe AAPL did confirm the 318.00 close and the holiday Q4 earnings report will be another all-time record revenues and earnings. Presently AAPL has rallied above the 318.00 benchmark price. More about AAPL stock evaluation in future posts, but the current AAPL price appears low. Our price target for AAPL is $400. The intermediate-term trend continues bullish and the long-term trend continues bullish.

AAPL Monthly Chart
Up +310% and +$242 from January 20, 2009 cyclical closing low of $78.20!

Below is the monthly AAPL chart since the January 2009 cyclical low. The overall analysis and commentary is the same as for the daily chart above. The current price is the yellow horizontal line. The yellow uptrend line is the same as described, but not shown, on the daily chart above. The white moving average line is the 10 month exponential moving average of 272.38, which is the long-term bull or bear market signal. AAPL is well above the 10m ema with the current close. AAPL has remained above the 10m ema since April 2009 indicating a long-term bull market.

We are long AAPL.

About Apple

Apple Inc. achieved a milestone the week of May 24, 2010, passing Microsoft in market capitalization to become the largest technology company, and second overall largest company, in the USA. AAPL's market capitalization is now $294.10B, compared to Microsoft's of $238.72B. Exxon leads with $363.92B. Apple reported calendar Q3 revenues of $20.3B and net income of $4.3B. Microsoft reported calendar Q3 revenues of $16.2B and net income of $5.4B. Current Apple financial  data is at the Apple Financial Performance page. Current Microsoft financial data is at the Microsoft Financial Performance page. Apple is now 19.94% of the NASDAQ 100 index, as measured by the QQQQ ETF portfolio holdings, weighted by market capitalization. AAPL is one of the most traded stocks in the USA. Per the SEC Form 10-K, Apple had 46,600 full-time employees and 2,800 temporary full-time employees and contractors as of September 25, 2010.

Apple's Mission Statement and as described in press releases, "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices."

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