Sunday, January 30, 2011

Apple Uncertainty with Steve Jobs Absent (Charts) *Up +2.9% for week, below 20 day average* AAPL


Apple Inc. Co-Founder and CEO Steve Jobs
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 Overview

AAPL AAPL closed at $336.10 on Friday, January 28, 2011 and was up a surprising +2.87% for the week, is up +4.20% for the month and year, and is up +304.40% from the market cyclical low on March 9, 2009. This equates to +$9.38 for the week, +$13.54 for the month and year, and +$243.61 since March 9, 2009. AAPL set an all-time closing high of $348.48 on January 14, 2011 and now is -3.55% and -$12.38 below this peak. The all-time closing high was on a Friday and Apple Inc. announced the next Monday that Co-Founder and CEO Steve Jobs was taking a medical leave of absence. So the -3.55% drop has both this announcement and the overall market downdraft on January 28 factored in.

S&P 500 By comparison, the overall market, the S&P 500, at 1276.34, was down -0.55% for the week and is up +1.49% for the month and year. SPX is up +89% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1299.54 on Thursday, January 27, 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 outperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Drops on Egyptian Uprising (Charts) *Economic news, corporate earnings pushed aside*].

Apple Fundamentals Apple reported calendar Q4 2010 financial results on Tuesday, January 18 which were legendary. Apple reported record revenues and net income which exceeded 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 On January 22 Apple announced the App Store had surpassed 10 billion downloads in about 2.5 years. On January 18 Apple announced legendary financial results for Q4 2010. Apple announced on January 17 Apple Co-Founder and CEO Steve Jobs was taking a medical leave of absence. 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. Earlier, Apple launched the iPhone 4 in late June and the iPad in early April. A summary and review of these announcements are posted on this blog. 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 Uncertainty with Steve Jobs Absent

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: $336.10
2011 and All-Time 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. AAPL is above both.

Resistance Resistance now appears to be buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave more than just technical resistance. So far AAPL has performed remarkably well as the fundamentals of Apple Inc. are stellar. 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 20 day simple moving average (337.54) on January 21, regained the 20d sma, and then dropped back below on January 28 as the market overall fell. Further trading will determine if this is now truly resistance. Key resistance is the January 26 close of 343.85, this is the post-Steve Jobs closing high, so to speak. There is also additional resistance in the low 340s.

Support As with resistance, buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave will determine support more than just technical support. So far AAPL has performed remarkably well as the fundamentals of Apple Inc. are stellar. However, the 325 - 326 area is key support that has held so far. The slightly ascending 50 day simple moving average of 325.93 is critical technical and psychological support and has not been tested since AAPL rose above on September 3. 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.

Moving Averages AAPL closed below the ascending 20 day simple moving average on Friday, January 28, but was caught in the overall market downdraft. AAPL has regained the ascending 25d sma. 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 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 The yellow downtrend line, a rate of price descent, is from the January 14, 2011 all-time closing high of 348.48 down through the highest close since the medical leave of Steve Jobs was announced on January 17. This was the close of 343.85 on January 26. AAPL has pinned through and tested the downtrend line but has not closed above.

Relative Strength Index (RSI) The RSI 14 day = 49.98 is reasonable, low, plunging, and the lowest since 48.58 on December 1, 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 = 59.04 is reasonable, decreasing, and above the recent low of 54.75 on January 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 are at reasonable levels.

MACD (12,26,9) The MACD = -0.73, decreasing, and has been negative for 7 consecutive trading days. 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 high 21.1M on Friday, January 28 but is tapering off somewhat from the previous week of record-high volume. The 20 day moving average is approximately 19.0M. The 50d sma is approximately 15.2M.

Long-Term Trend The 10 month exponential moving average of 284.26 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 Buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave will determine how high AAPL can go. So far AAPL has performed remarkably well, actually outperformed the overall market, as the fundamentals of Apple Inc. are stellar, as discussed above and reviewed on this blog. Our updated stock valuation short-term for AAPL is $370 - 375. The intermediate-term trend continues bullish and the long-term trend continues bullish.

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. Apple Inc. has managed to continue above $300B market capitalization after the announcement of Steve Jobs' medical leave of absence. AAPL's market capitalization is now $309.64B, compared to Microsoft's of $233.17B. Exxon leads with $398.31B. Apple reported calendar Q4 2010 revenues of $26.7B and net income of $6.0B. Microsoft reported calendar Q4 2010 revenues of $19.95B and net income of $6.6B. 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 20.42% 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."

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