Saturday, January 22, 2011

Apple Drops During Memorable Week (Charts) *Steve Jobs medical leave + record earnings reported* AAPL

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Apple Inc. Co-Founder and CEO Steve Jobs in the early years
Apple announced on Monday, January 17, 2011 that Steve Jobs was taking a medical leave of absence
Apple announced on Tuesday, January 18, 2011 legendary financial results for Q4 2010
Apple announced on Saturday, January 22 App Store downloads had surpassed 10 billion in about 2.5 years


Apple Overview

AAPL After this historic week, AAPL closed at $326.72 on Friday, January 21, 2011 and was down -6.24% for the week and is up +1.29% for the month and year. This equates to -$21.76 for the week, +$4.16 for the month and year, and +$243.61 since the March 9, 2009 market bottom.

Memorable Week What a memorable week for Apple Inc.! Apple announced on Monday, January 17 Steve Jobs was taking a medical leave of absence. Apple announced on Tuesday, January 18 legendary financial results. Reaction by the market was the Steve Jobs health news was more negative than the positive Q4 2010 financial results. On Saturday, January 22 Apple announced the Apple App Store had surpassed 10 billion downloads in about 2.5 years. Apple's market capitalization surpassed $300 billion the week ending January 7 and managed to stay above for the week ending January 21 ($301 billion). See the About Apple section at bottom of this post for more discussion. Apple is down -6.24% from the all-time closing high of $348.48 on January 14, 2011. Apple has gained for 7 of the past 9 weeks and is up +293% since the March 9, 2009 market cyclical low.

S&P 500 By comparison, the overall market, the S&P 500, at 1283.35, was down -0.76% for the week and is up +2.04% for the month and year. SPX is up +90% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1295.02 on Friday, January 18, 2011, the highest close since the August 28, 2008 close of 1300.68. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperformed the market in 2010, and now underperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Lower, Snaps 7-Week Winning Streak (Charts) *Continues below 1300*].

Apple Fundamentals Apple reported calendar Q4 2010 financial results on Tuesday, January 18 which were legendary. Apple reported record revenues and net income which exceed the previous record reported for calendar Q3 2010. These financial results are reviewed and analyzed on this blog.. Current Apple financial  data, charts, and review is at the Apple Financial Performance page, updated for the latest calendar Q4 2010 results reported on January 18. A review and analysis of the Q3 2010 earnings call has been posted at the Apple Earnings Conference Call page and will be updated soon for the Q4 2010 earnings call. Our updated valuation and target price of AAPL stock is posted at the Apple Stock Valuation page.

Apple Product News Apple announced on January 17 Apple Co-Founder and CEO Steve Jobs was taking a medical leave of absence. On January 18 Apple announced legendary financial results for Q4 2010. On January 22 Apple announced the App Store had surpassed 10 billion downloads in about 2.5 years. Verizon Wireless and Apple announced on January 11 the iPhone would be available on the Verizon Wireless network beginning February 10. The online Mac App Store opened on January 6, 2011, increasing Apple's cloud presence, and Apple announced there were 1 million downloads in the first day. On December 21, Apple reported sales of Apple TV would surpass 1 million units during the week. On October 20, the all-new MacBook Air was unveiled along with updates for the iLife suite, FaceTime for Mac, and a peek 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 62% of revenue for Q4 2010, up from 52% in Q3 2010.

Economic and Market News Information about the USA and world economies plus the USA financial system are posted at Boom Doom EconomyFinancial Controls, and Baidu Planet. Additional current commentary on both the overall stock market and economy is posted at Matrix Markets.


Apple Drops During Memorable Week

Apple Daily Chart Below is the AAPL daily chart since December 13, 2010 to illustrate all trading at or above $325. There are no previous price interactions, Apple has never traded this high before, above $325. A monthly chart is included lower on this page for a longer-term perspective.

Noteworthy Closing Prices
Current Close: $326.72
2011 High: January 14 $348.48
2011 Low: January 3 $329.57
2010 High: December 28 $325.47
2010 Low: February 4 $192.05
YE December 31, 2010: $322.56
YE December 31, 2009: $210.73
Cyclical Low: January 20, 2009 $78.20

* 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. Both the 25d sma (not shown on chart) and the 50d sma are slightly ascending.

Resistance Resistance now appears to be buyer conviction more than technical resistance. AAPL is below the all-time closing high of 348.48 set on January 14, 2010, so there are several levels of resistance above. AAPL also dropped below the leveled off 20 day simple moving average (333.58) on January 21, but further trading will determine if this is now resistance. Another week of trading appears necessary to see where AAPL settles down after the news of the past week.

Support As with resistance, buyer conviction will determine support more than technical support. However, the 325 - 326 area is key support that hopefully will hold. The slightly ascending 50 day simple moving average of 322.92 is critical technical and psychological support. Further below, the 321 and 320 area is support. This corresponds with multiple closings in this area. Additional support is the 318.00 area. This corresponds with October 18, November 10, and December 2 closings of 318.00, 318.03, and 318.15, respectively. Well below is the 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. Another week of trading appears necessary to see where AAPL settles down after the news of the past week.

Moving Averages AAPL closed below the slightly ascending 20 day simple moving average on Friday, January 21, the first time since November 30, 2010. AAPL also closed below the ascending 25d sma on January 21, the first time since November 23. AAPL continues above the 50, 100, and 200 day sma's, which are all ascending. Each is above any longer term average.

Uptrend Line (Not shown on the daily chart above, but is shown on the monthly chart below) 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 February 4 closing low was the bottom for 2010. AAPL dropped below this trendline on August 23, but regained it on September 3 and remained above since.

Downtrend Line Uncertain if there is a downtrend line in play. Another week of trading appears necessary to see where AAPL settles down after the news of the past week.

Relative Strength Index (RSI) The RSI 14 day = 54.17 is reasonable, low, plunging, and the lowest since 51.29 on December 2, 2010. The recent peak was 87.42 on January 14, 2011, which surpassed the October 18 peak of 82.04 (a correction then ensued). The multi-year and 2010 high was 97.49 on September 16 (rally continued for a few days before a correction). The 2010 low was 21.49 on August 24. The RSI 28 day = 54.75 is reasonable, low, plunging, and the lowest since 54.00 on December 21. The 2010 peaks were 84.63 and 83.79 on April 5 and April 23, respectively. The 2010 low was 38.25 on August 31. Both RSIs plunged this past week but continue at reasonable levels.

MACD (12,26,9) The MACD = -1.36, is plunging, and reflects the rapid drop in price. This is the lowest MACD since -1.47 on November 22, 2010. The September 22 MACD of +3.16 was the 2010 high. The 2010 low was -3.55 on May 7. Previously the highest was on November 4, 2008 at +3.41.

Volume Volume was a very high 26.9M on Friday, January 21 and was the lowest of the 4-day trading week! Volume on Tuesday, January 18, 2011 was an astronomical 66.9M and undoubtedly an all-time high. This was the day after the announcement of the medical leave of absence by Steve Jobs and also the day Q4 2010 earnings were reported. Incredible! Volume on the subsequent Wednesday, Thursday, and Friday was 40.5M, 27.3M, and 26.9M, respectively. The 20 day moving average of was approximately 10.5M the Friday before, January 14, and is now 16.3M. The 50d sma is approximately 1315.3M.

Long-Term Trend The 10 month exponential moving average of 282.55 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 What a week, as discussed above. Our updated stock valuation short-term for AAPL is $370 - 375. The intermediate-term trend continues bullish and the long-term trend continues bullish. Another week of trading appears necessary to see where AAPL settles down after the news of the past week.


Apple Monthly Chart

Below is the monthly AAPL chart since the January 20, 2009 cyclical closing low of 78.20. The overall analysis and commentary is the same as for the daily chart above. The yellow uptrend line is the same, and as described above, on the daily chart discussion. The white moving average line is the 10 month exponential moving average, which is the long-term bull or bear market signal. AAPL is well above the 10m ema at the current close. AAPL has remained above the 10m ema since April 2009 indicating a long-term bull market.


Disclosure
We are long AAPL.


About Apple

Apple Inc. achieved a milestone the week of January 7, 2011 when total market capitalization surpassed $300 billion. Previously, the week of May 24, 2010, Apple surpassed Microsoft in market capitalization to become the largest technology company, and second overall largest company, in the USA. AAPL's market capitalization is now $301.00B, compared to Microsoft's of $239.73B. Exxon leads with $398.26B. Apple reported calendar Q4 2010 revenues of $26.7B and net income of $6.0B. Microsoft reported calendar Q3 2010 revenues of $16.2B and net income of $5.4B and will report Q4 2010 financial results on January 27. 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 19.87% of the NASDAQ 100 index, as measured by the PowerShares 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."


All the Best Mr. Jobs!

First and foremost we wish tech legend Steve Jobs the very best. Thank you Mr. Jobs for your continuing excellence and enthusiasm in life which is a shining example. Thank you Sir for your ongoing inspiration to us. We hope you will soon be back at the helm of your beloved Apple. God Bless.


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