According to yesterday's report, Apple's holiday season earnings hit new records, and the company's iconic iPhone, whose popularity was once considered to be fading, made a comeback.
Apple (NASDAQ:AAPL) is up $6.22, or 1.96% in the premarket. It beat on both EPS, which came in at $4.99—though $4.54 was expected—and revenue, which came in at $91.82 billion, besting the $838 billion forecast. Remarkably, too, out of 26 times the company's EPS has been reported, it has missed only once. More impressive still: results beat both headline numbers for the same quarter in the previous year.
Though the market may have once eulogized the iPhone, revenues from the smartphone make up more than half of the company’s sales. This year they totaled $55.96 billion, an increase of more than 7% YoY.
Moreover, management presented a positive outlook, while indicating that the coronavirus outbreak in China gives the company less visibility than it would normally have.
Of course, fundamental events such as geopolitical jitters, future negative guidance or even language missteps by the Fed or other high-profile global central banks could weigh on markets, including Apple shares. But right now, at least based on its technicals, the stock looks set to outperform.
Among the tech giants currently reporting earnings, Apple’s stock has fared well during the general selloff. Amazon (NASDAQ:AMZN) dropped 4.45%, though yesterday’s rally pared the loss to 2.69%. Facebook (NASDAQ:FB) lost up to 4.13% of value, although yesterday's rebound trimmed that to a 2.02% loss. Microsoft (NASDAQ:MSFT) slumped 2.88%, which shrank to 0.98% lower as of yesterday.
Apple, however, which lost up to 3.28% from the record high of $323.32 it reached on Jan. 24, has now regained almost all its losses. Price has returned above its most recent uptrend line since the Dec. 3 low.
Yesterday, ahead of the company's earnings report, it was a comfortable 0.48% below its record. Premarket trading suggests a new record will be hit today during the U.S. session.
That said, both RSI and MACD topped out, providing sell signals. Therefore, conservative traders should stay out of the upcoming rally before price returns to its uptrend line.
Trading Strategies
Conservative traders should wait for a return to at least $250, then wait for proof of demand.
Moderate traders may go long upon a correction to the $300 level or thereabout, upon signs of a consolidation.
Aggressive traders could enter a contrarian short position after recognizing resistance throughout the session.
Trade Sample – Short Position Setup
- Entry: $325
- Stop-Loss: $330
- Risk: $5
- Target: $310
- Reward: $15
- Risk:Reward Ratio: 1:3