Saturday, March 19, 2011

Apple Drops Below 100 Day Average (Chart) *Market pullback & iPad 2 component supply concerns* AAPL


At least five Apple iPad 2 components are from Japanese suppliers, there are concerns over supply disruptions

Apple Overview

Apple Inc. AAPL closed at $330.67 on Friday, March 18, 2011 and was down -6.06% for the week, is down -6.38% for March, is up +2.51% for 2011, and is up +297.87% from the market cyclical low on March 9, 2009. AAPL set an all-time closing high of $363.13 on February 16, 2011 and now is -8.94% below this peak. Apple is below the then all-time closing high of $348.48 of January 14, 2011. That all-time closing high was on a Friday and Apple Inc. announced the next Monday, January 17, that Co-Founder and CEO Steve Jobs was taking a medical leave of absence. AAPL received a rare stock downgrade this past week but also an increased price target by another firm.

S&P 500 By comparison, the overall market, the S&P 500, at 1279.20, was down -1.92% for the week, is down -3.62% for March, and is up +1.71% for 2011. SPX is up +89.08% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1343.01 on Friday, February 18, 2011, the highest close since the June 17, 2008 close of 1350.93. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperformed the market in 2010, and continues outperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Tests 100 Day Average (Chart) *Global tumult continues*].

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-setting results 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 Q4 2010 earnings call has been posted at the Apple Earnings Conference Call page. Our updated valuation and target price of AAPL stock is posted at the Apple Stock Valuation page. International sales accounted for 62% of revenue for Q4 2010, up from 52% in Q3 2010.

Steve Jobs Launches iPad 2 Apple CEO and Co-Founder Steve Jobs launched the iPad 2 on Wednesday, March 2, 2011. This was the first public appearance by Jobs since the announcement of his medical leave on January 17, 2011. Jobs has not lost his touch on compelling Apple product roll outs. Jobs called the iPad the "third post-PC blockbuster product", after the iPod and iPhone, and an obvious jab at the Microsoft PC business model. He further stated the iPad is "a magical and revolutionary device at an unbelievable price". Jobs went on to suggest about the iPad, "some have said this is the most successful consumer product ever launched". He noted about the Tablet PC market, "our competitors are just flummoxed". This Apple Event is reviewed in detail at Steve Jobs Launches iPad 2 and Apple Unveils iOS 4.3.

Apple Product News 2011 A summary & review of 2011 & 2010 announcements are posted on this blog.
There are concerns that components of the iPad 2 (at least five) from Japanese suppliers may be delayed. The iPad 2 went on sale on Friday, March 11 and promptly sold out online, pushing delivery dates from days to weeks. Lines at Apple stores in the USA were long and the only way to have any hope of purchasing an iPad 2 and taking immediate delivery. Apple launched the iPad 2 and iOS 4.3 on March 2. Steve Jobs also announced 1) 100 million downloads from iBooks store, 2) Random House will begin distributing their 17,000+ books on iBooks, 3) 200 million accounts with credit cards and one-click purchasing on iTunes, App Store, and iBooks, 4) over $2 billion paid to developers from selling apps on the App Store, 5) 100 million iPhones have been shipped, and 6) almost 15 million iPads were sold in 2010. Apple launched the new MacBook Pro on February 24. Steve Jobs met with President Barack Obama at a dinner on February 17. This was the first "semi-public" appearance of CEO Jobs since the announcement of the medical leave on January 17. Apple announced an App Store subscription service for magazines, videos, music, and videos on February 15. The Apple iPhone 4 officially is on the Verizon Wireless network and available at stores effective February 10. Verizon Wireless announced on February 4 record first day launch sales (online pre-order) of the iPhone 4. The record was broken in 2 hours. On January 22 Apple announced the App Store had surpassed 10 billion downloads in about 2.5 years. 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.

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 Daily Chart

Apple Daily Chart Below is the AAPL daily chart since December 28, 2011 to illustrate recent applicable price interactions.

Noteworthy Closing Prices
Current Close: $330.67
2011 and All-Time High: February 16 $363.13
2011 Low: January 21 $326.72
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

Apple Chart Review
Intermediate Term Trend: descending 25d sma > level 50d sma, tenuously bullish
Long Term Trend: 10 month ema = 303.35, bullish
Resistance: 100 day avg 331.56, 50 day avg 346.46, 20 day avg 347.68, 348.48, 355 area, 358, 360, 363-364
Support: 325-327 area, 321-320 area
Moving Averages: below 20d, 25d, 50d, 100d sma's, above 200d sma
Uptrend Line: above, from 1-20-09 closing low 78.20 up thru 2-4-10 192.05
Downtrend Line: below, from 2-16-11 all-time closing high 363.13 to 3-4-44 peak 360.00
RSI 14 day = 33.37 is oversold, descending
RSI 28 day = 41.54 is reasonable, leaning oversold, descending
MACD (12,26,9) = -3.04, descending, lowest since 5-7-10 (-3.55)
Volume: very high 26.9M latest day, 20 day avg = 20.9M, 50 day avg = 19.4M
Price Earnings Ratio: 18.46

Conclusion Apple has dropped 4 of the past 5 weeks mostly on the global uncertainty and now concerns over iPad 2 components supply disruptions. Apple is struggling with both specific issues and the overall market downdraft. Buyer conviction and confidence weakened this past week. The fundamentals of Apple Inc. are stellar, as discussed above and reviewed on this blog. Our updated stock valuation short-term remains $370 - 375. The intermediate-term trend continues tenuously bullish and the long-term trend continues bullish.

Disclosure We were stopped out of our long AAPL position. Currently we have no position in AAPL. We are still bullish on AAPL for 2011.

About Apple Inc.

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 #2 at $304.64B, compared to #3 Microsoft's of $208.38B. #1 Exxon leads with $400.90 (Exxon surpassed $400 billion in market capitalization the week ending February 4, 2011). 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 20.60% 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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