Saturday, March 5, 2011

Apple Rallies on iPad 2 & Steve Jobs! (Charts) *Up +3.4% for week to $360!* AAPL


Apple CEO and Co-Founder Steve Jobs launched the iPad 2 on March 2, 2011

Apple Overview

Apple Inc. AAPL closed at $360.00 on Friday, March 4, 2011 and was +3.40% for the week, is +1.92% for March, was +4.09% for February, was +5.20% for January, is +11.61% for 2011, and is +333.16% from the market cyclical low on March 9, 2009. This equates to +$11.84 for the week, +$6.79 for March, +$13.89 for February, +$16.76 for January, +$37.44 for 2011, and +$276.89 since the March 9, 2009 market bottom. AAPL set an all-time closing high of $363.16 on February 16, 2011 and now is -0.86% and -$3.13 below this peak. Apple is now above 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.

S&P 500 By comparison, the overall market, the S&P 500, at 1321.15, was +0.10% for the week, is -0.46% for March, was +3.20% for February, was +2.26% for January, and is +5.05% for 2011. SPX is +95.28% 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 Ekes Out Weekly Gain Despite Libyan Revolution (Charts) *Below 20 day average*].

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 The big news was Apple CEO and Co-Founder Steve Jobs launching 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 A summary and review of these announcements are posted on this blog.
=> 2011 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.
=> 2010 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.

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 January 14, 2011, the Friday close of $348.48 which was before the announcement on Monday, January 17 that Apple Co-Founder and CEO Steve Jobs was taking a medical leave of absence. There are no previous price interactions at $350. Apple has never traded this high before, above $350. A monthly chart is included lower on this page for a longer-term perspective.

Noteworthy Closing Prices
Current Close: $360.00
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

* The 25 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 ascending. AAPL is above both.

Resistance Resistance has ultimately been buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave. Buyer conviction was strengthened with Steve Jobs launching the iPad 2 on March 2. The only resistance is the all-time closing high of 363.16 on February 16, 2011 and the same day all-time intraday high of 364.90. AAPL is again at lofty heights.

Support As with resistance, buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave has been ultimately what would determine support. Buyer conviction was strengthened with Steve Jobs launching the iPad 2. AAPL closed at support of 360.00. The 20 day simple moving average of 353.03 is next support. AAPL has regained the highest close (348.48 on January 14) before the announcement on January 17, 2011 of Steve Jobs' medical leave, which is support. The 50 day simple moving average is support that held on February 22-24 (now 342.63).Further below is the previous closing low support of 338.61, then 325-327 area and the 321 and 320 area, which corresponds with multiple closings in this area.

Moving Averages AAPL is now above all the simple moving averages monitored: the 20, 25, 50, 100, and 200 day simple 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 There is no significant downtrend line in play as the all-time closing high of 363.13 was set recently on Wednesday, February 16.

Relative Strength Index (RSI) The RSI 14 day = 52.63, up from last week's 51.43, is reasonable, descending, and below the recent peak of 76.25 on February 17. The earlier peak was 87.42 on January 14, 2011, which surpassed the October 18, 2010 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 = 60.71, well above last week's 49.86, is reasonable, and descending. 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 = +0.08, well above last week's -2.03 and increasing. 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 below average 16.2M on Friday, March 4. The mostly level 20 day moving average is approximately 18.2M. The increasing 50d sma is approximately 16.8M.

Long-Term Trend The 10 month exponential moving average of 308.68 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 Libyan revolution and resulting spike in oil prices has created flat to declining equity markets. Apple was able to evade the market uncertainty and rally due to Steve Jobs launching the iPad 2 on March 2. Buyer conviction and confidence in Apple Inc. with Steve Jobs on medical leave was strengthened by Jobs appearing for the iPad 2 roll out. 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 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 $331.66B, compared to #3 Microsoft's of $218.06. #1 Exxon leads with $421.88B (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 21.05% 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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