The stock market is selling off hard on rising virus cases and election uncertainty, and it faces another big test Thursday when Big Tech favorites report earnings.
As one of the largest and most widely held companies in the world, Apple Inc. AAPL often exerts outsize influence on the market. That’s been especially true in 2020 as Tech companies took on the mantle of market leadership, helping send the broader market both higher and lower, depending on the day.
Lately, however, Tech has been in a bit of a funk, losing some leadership to the more “cyclical” sectors like Financials and Industrials as many investors hope for an economic revival. Also, some of what we’ll call the “pandemic names” like Workday Inc WDAY, Docusign Inc DOCU, and the Trade Desk Inc TTD have pulled attention away from the “mega-caps.” Still, AAPL’s recent rollout of the iPhone 12 and its stock split put the company back in the spotlight.
Apple never lacks attention when it reports, even when its earnings compete with three other “FAANG” stocks for attention. That’s the case when AAPL opens its fiscal Q4 books Thursday after the close, but with CEO Tim Cook’s company still brandishing a $2 trillion market cap, anything AAPL says or does will probably stand out on the crowded calendar.
AAPL is expected to report adjusted earnings of $0.71, down from $0.76 in the prior-year quarter, according to third-party consensus analyst estimates. Revenue is projected at $64.1 billion, roughly flat versus a year ago.
The options market has priced in an expected share price move of 3.4% in either direction around the earnings release, according to the Market Maker Move™ indicator on the thinkorswim® platform.
Looking at the October 30 expiration, put activity has been heavy, with concentrations at the 110 and 112 strikes. Even higher numbers have been seen to the upside, with the 120 calls dwarfing others, but with heavy concentrations also at the 115 and 125 strikes. The implied volatility sits at the 43rd percentile as of Wednesday morning.
The market has fluctuated wildly throughout the last year of Trump’s first term. The Dow soared above 29,000 for the first time in history in January and February, before cratering in March as the coronavirus and a wave of lockdowns slammed the country. March was the worst period for the market since the 2008 financial crisis, but stocks steadily recovered since then because of the rebounding economy and the extraordinary government support authorized by the Federal Reserve and Congress. The Dow again eclipsed 29,000 in September and had held largely steady before the current sell-off, which has sent it below 27,000.
Apple Inc. designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players.
The Company sells a range of related software, services, accessories, networking solutions, and third-party digital content and applications.
The Company’s segments include the Americas, Europe, Greater China, Japan and Rest of Asia Pacific.
The Americas segment includes both North and South America. The Europe segment includes European countries, India, the Middle East and Africa.
The Greater China segment includes China, Hong Kong and Taiwan.
The Rest of Asia Pacific segment includes Australia and the Asian countries not included in the Company’s other operating segments.
Its products and services include iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iPhone OS (iOS), OS X and watchOS operating systems, iCloud, Apple Pay and a range of accessory, service and support offerings.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 121.34.
The projected lower bound is: 100.89.
The projected closing price is: 111.11.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.7519. This is not an overbought or oversold reading. The last signal was a buy 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.60. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 38 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -144.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed down -5.400 at 111.200. Volume was 11% below average (neutral) and Bollinger Bands were 38% narrower than normal.
Open High Low Close Volume 115.050 115.430 111.100 111.200 143,937,824
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 116.37 117.38 90.37 Volatility: 33 55 60 Volume: 109,558,792 166,904,976 169,270,768
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
APPLE INC is currently 23.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 10 periods.