Apple Digest: Apple Pulls Back a Second Week (Charts) *Down -2.1% for week, up +6.1% for October* AAPL

AAPL

Apple CEO Steve Jobs unveiled the all-new MacBook Air at the "Back to the Mac" event on October 20

Apple Overview

AAPL Apple closed at $300.98 on Friday, October 29, 2010. Even with record quarterly revenues and net income reported on October 18, AAPL was down -2.11% for the week and down -2.31% last week, but finished up +6.07% in October, is up an incredible +42.83% for the year, and is up an astronomical +262.15% since the March 9, 2009 market bottom. This equates to -$6.49 for the week, +$17.23 for October, +$90.25 for the year, and +$217.87 since the March 9, 2009 market bottom. AAPL is down -5.35% and -$17.02 from the 2010 YTD closing high of $318.00 on October 18, just minutes from the calendar Q3 earnings report. Apple has traded above $300 for 13 consecutive trading days.

S&P 500 By comparison, the overall market, the S&P 500, was up +0.02% for the week, up +3.69% for October, up +6.11% for the year, and up +74.90% since the March 9, 2009 market bottom. SPX is down -2.79% from the April 23, 2010 YTD closing high of 1217.28. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperforming the market for 2010, and outperformed the market in October. Apple has underperformed the market the past 2 weeks. A review of the S&P 500 (S&P 500 Rally at Resistance (Charts) *Weekly gain just +0.18, +0.02%*) is here.

Apple News and Fundamentals Apple reported record revenues and net income for Q3, which 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 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 has 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 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 are posted at Boom Doom Economy and Financial Controls.

Apple Pulls Back Two Straight Weeks

AAPL Daily Chart Below is the AAPL daily chart since September 23, 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. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below

Current Close: $300.98

2010 YTD and All-Time High, October 18: $318.00

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 and finally caught up with the amazing AAPL September Bull Run (+16.7%) that now continued into mid-October (+6.1%).

Resistance AAPL has pulled back from the all-time closing high of 318.00 on October 18, which is now final resistance. Current resistance is the close on October 22 of 307.47 (the highest yellow horizontal line on the daily chart above), next is the 310.00 area, specifically the 309.49 close on October 19 and the 310.53 close on October 20. The all-time closing high and intraday high of 318.000 and 319.00, respectively, on October 18 is final resistance.

Support AAPL surpassed for the first time in history and now has remained above 300.00 for 13 consecutive trading days so there are multiple levels of support below. The 300.00 area is psychological and benchmark support (the middle yellow horizontal line on the daily chart above). Support was found here on October 29 to continue above 300.00. A prior all-time closing high of 292.32 on September 24 (the lowest yellow horizontal line on the daily chart above) and the prior intraday high of 279.01 on June 21 are benchmark support. The prior all-time and 2010 YTD closing high of 274.07 on June 18, the top of the summer trading range, is also key support further below.

Moving Averages AAPL continues well above all the daily simple moving averages: the 25, 50, 100, and 200 (only the 25d and 50d sma's are shown on the daily chart above). The 25d sma is leveling off after two weeks of net declines by AAPL and continues above the 50d, 100d, and 200d sma's. The 50d sma continues ascending sharply and is above the 100d and 200d sma's. The 100d sma is ascending and above the 200d sma. The 200d sma continues to ascend, indicating the overall trend is upwards. These moving averages have been spread out in a bullish fan.

Uptrend Line (Not shown on the daily chart this week) The yellow uptrend line, a rate of price ascent, is from the January 20, 2009 closing low of 78.20 up through the February 4, 2010 cyclical 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 for 35 consecutive trading days.

Downtrend Line AAPL is below the recent all-time closing high of 318.00, a significant downtrend line is probably developing, and will be added to the chart next week.

Relative Strength Index (RSI) The RSI 14 day = 56.32 is reasonable, descending, and well below the recent highs during the price runup. 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 = 60.19 is reasonable, descending, and well below the recent highs during the price runup. 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. The RSIs have decreased as AAPL has in the past 2 weeks.

MACD (12,26,9) The MACD = -1.68, has been downtrending for 9 consecutive trading days, and has been negative for 5 consecutive trading 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 AAPL volume was 15.3M on Friday, October 29 and the 20-day moving average is approximately 20.0M. The 20d sma peaked right after the calendar Q3 earnings report on October 18. The 50d sma is approximately 19.9M, leveling off after the October 18 earnings report. Overall, it the Apple Frenzy has abated for now.

Long-Term Trend The 10 month exponential moving average of 250.67 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 of 300.98. 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 has pulled back for the past 2 weeks. We believe AAPL did confirm the 318.00 close and the holiday Q4 earnings report will be another all-time record revenues and earnings. 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 is bullish and the long-term trend is bullish.

AAPL Monthly Chart

Up +285% and +$222.78 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, the yellow horizontal lines, and the yellow uptrend line are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average of 250.67, which is the long-term bull or bear market signal. AAPL is well above the 10m ema with a close on Friday, October 22 of 300.98. 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 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 $276.09B, compared to Microsoft's of $230.75B. Exxon leads with $338.55B. 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. Apple is now 19.98% (10-28-10) of the NASDAQ 100 index, as measured by the QQQQ ETF, 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 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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