Apple Digest: Apple Drops Below 100 Day Average (Chart) *Continues below 20 & 50 day averages* AAPL

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NASDAQ is rebalancing the NASDAQ 100 Index effective May 2, 2011
Among the changes, Apple will decrease from 20.49% to 12.33%

Apple Overview

Apple Inc. AAPL closed at $335.06 on Friday, April 8, 2011 and was down -2.76% for the week, is down -3.86% for April, was down -1.33% for March, is up +3.88% for 2011, and is up +303.15% from the market cyclical low on March 9, 2009. AAPL set an all-time closing high of $363.13 on February 16, 2011 and is now -7.73% below this peak.

Benchmark $348.48 Apple continues 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. We are watching this benchmark price of $348.48 as an indicator of buyer conviction and confidence in AAPL with Steve Jobs on medical leave.

S&P 500 By comparison, the overall market, the S&P 500, at 1328.17, was down -0.32% for the week, is up +0.18% for April, was down -0.10% for March, and is up +5.61% for 2011. SPX is up +96.32% 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 is now underperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Dips -4.24 for Week (Chart) *Continues above 20 & 50 day averages*].

Apple Fundamentals Apple will report Q1 2011 financial results on Wednesday, April 20, after market close and the earnings call will be at 2:00 p.m. PT. 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.

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 international launch of the iPad 2 in 25 countries was March 25 to long lines of customers at Apple stores. 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 Economy, Financial 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 31, 2010 to illustrate recent price interactions.

Noteworthy Closing Prices

Current Close: $335.06

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 < descending 50d sma, bearish

Long Term Trend AAPL > 10 month ema = 311.77, bullish since April 2009

Resistance 100d avg 336, 20d avg 342, 50d avg 348, benchmark 348.48, 350-351, 353-354, 363-364

Support at support 335, 325-327 area, 321-320 area

Moving Averages below 20d, 25d, 50d, 100d avgs, above 200d avg

Uptrend Line above since 9-2-10, line from 1-20-09 closing low 78.20 up thru 2-4-10 192.05

Downtrend Line below since 3-7-11, line from 2-16-11 all-time closing high 363.13 to 3-4-11 peak 360.00

RSI 14 Day = 43.74 is nearing oversold, descending

RSI 28 Day = 43.30 is near oversold, descending

MACD (12,26,9) = -0.98, descending

Volume low 13.5M latest day, 20 day avg = 16.9M, 50 day avg = 17.2M

Price Earnings Ratio 18.71, down from past week, historically low 20s

Conclusion Apple dropped this past week on mostly low volume and has dropped 6 of the past 8 weeks. Presumably the latest weekly decrease was due to the April 5 NASDAQ announcement that the NASDAQ 100 will be rebalanced effective May 2. This will reduce Apple's weight from 20.49% to 12.33%. This creates an excess supply of Apple shares for at least the short-term. Otherwise there was not any negative news of significance and Q1 2011 financial results are expected to be very good. There has been some concern over iPad 2 components supply disruptions due to the Japanese earthquake. Buyer conviction and confidence is more on the sidelines than positive or negative. We expect Apple to rally during earnings season as investor interest increases. The fundamentals of Apple Inc. are stellar, as discussed above and reviewed on this blog. Our stock valuation short-term remains $370 - 375. The intermediate-term trend indicator is bearish and the long-term trend continues bullish.

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 $308.68 billion, compared to #4 Microsoft's of $219.05 billion. #1 Exxon leads with $426.19 billion (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 20.11% 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."