Apple Inc.’s just-released earnings show quite a contrast between the recent past and the near future.
The projections for next quarter are downright ugly while earnings for the last quarter are a thing of beauty. First let us examine the technicals of Apple AAPL stock and then we will move on to the fundamentals.
Technical perspective
For a technical perspective, let us look at the chart.
Prior to earnings, Apple had broken the support at $419 – $421 and then dipped below $400. Now the prior support acts as resistance. In the after-hours action, Apple moved up about $19 and broke out of the resistance at $419 – $420 as shown on the chart. I expect the stock to back and fill here, break the support at $419 – $420, and test $400.
How the stock acts around $419 – $420 level will be very telling. If Wednesday morning the stock cannot sustain over $420, it will be a negative technical signal. On the other hand, if the stock stays above $420, the next resistance level is around $440 as shown on the chart. This is also where the downward sloping trendline meets the resistance line. We expect stiff resistance in the zone of $440 – $450.
From a little bit longer perspective, trading after the earnings report has not invalidated a target of $340 set by the head and shoulders pattern traced out by Apple when it was trading around $700. If Apple breaks $400, the next major support is at $360.
The point is that trading over the next couple of days will clarify the technical picture. At the time of this writing, the technical picture is murky at best.
The beautiful first quarter
Certainly first-quarter earnings should not be ignored, but it is the future that matters. For the quarter Apple reported $10.09 in earnings which is about in line with the consensus but lower than the whisper numbers.
Generally it is the difference between the actual reported earnings numbers and the whisper numbers that move the stock. However, since the whisper numbers were all over the place, the usual trading interpretation from the difference between whisper numbers and actual numbers is not applicable this quarter.
Apple reported revenues of $43.6 billion ahead of the consensus of $42.4 billion. Also on the positive side, Apple sold 36.4 million iPhones compared to consensus of 35 million. iPads also did better, 19.5 million iPads were sold compared to the 18 million estimate. Apple sold about four million Macs, in line with estimates.
The reason for the stock trading up
Some market participants are encouraged that Apple has raised its quarterly dividend by 15%….Read more at MarketWatch
