Monday after the close, Apple reported earnings. Dan Gallagher has done an excellent job of covering the numbers here. The only other important information I can add is that the tone of the conference call was very positive. Instead of regurgitating the numbers, I will show you both long – and short-term investors how to analyze, and profit from, the bull/bear battle that occurred after the earnings release.
It is elementary that a stock goes up when bulls overcome the bears, and a stock goes down when bears overcome bulls. The chart linked to below annotates how the bull/bear battle played out after the earnings release.
Please click here for the annotated chart showing the bull/bear battle.
The chart is a short-term tick chart. A link to a longer-term annotated candlestick chart is provided later in this column.
Immediately after the earnings release, the bulls bought aggressively in the zone shown on the chart on the top left-hand side because the headline was Apple reporting $8.26 per share; this was $0.32 higher than the consensus estimate of $7.94. The bulls were also encouraged because revenue came in at $37.47 billion compared to consensus of $36.87 billion. The buying was aggressive enough to run Apple stock over $540, something that has not happened for a while.
As bulls were celebrating, bears attacked with full force. My experience over the last 30 years has been that bears tend to be better at research than the bulls. The bears noticed that Apple projects first-quarter gross margins of 36.5%-37.5%, lower than the consensus expectations of 38%.
The bear attack was so vigorous that it drove down the stock from about $542 to about $503….Read more at MarketWatch
