Apple (NASDAQ:AAPL) stock is on the move again. The stock leapt $40 per share on Friday — a chunky 10% move — following the company’s much stronger than expected earnings report. On Monday, it added to gains and notched a fresh all-time high of $446 per share. Give the company credit, it shrugged off the novel coronavirus and managed to deliver stellar numbers.
You might be wondering why Apple has chosen to split its shares. After all, it’s now trendy not to split a company’s stock price. Management at Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), and Alphabet (NASDAQ:GOOGL) have let their share prices run into the thousands without any obvious drawback. With the advent of fractional share trading, you no longer need to pony up more than a thousand dollars at a time to buy a share of Amazon or Tesla.
For one thing, however, many investors don’t have access to fractional trading. And many traders perceive higher stock prices as being more expensive. A $100 share is viewed as more accessible than a $400 one, even if the company has the same underlying market capitalization in both examples.
Additionally, there’s one huge difference between Apple and the other three companies I named. Apple is an upstanding member of the Dow Jones Industrial Average. The Dow is price-weighted, meaning that the gauge moves based on how many points a company’s stock trades for. This makes high-priced stocks like Apple and Boeing (NYSE:BA) extremely powerful. Meanwhile, a stock trading for, say, $40 has almost no influence on the DJIA average.
As of this writing, Apple stock constitutes 10% of the entire Dow Jones index and related exchange-traded funds (ETF) products. The next largest holding is UnitedHealth (NYSE:UNH). UnitedHealth trades at $300 per share — significantly less than Apple — and thus constitutes less than 8% of the Dow Jones index. This stock split will get Apple down to a more reasonable portion of the Dow and keep it from unbalancing the overall index.
AAPL Stock Verdict
Enjoy the excitement around the upcoming stock split. As it may be the last round of enthusiasm you see for Apple stock for quite a long time.
There simply aren’t many paths to reasonable stock returns for Apple going forward. Investors need to honestly ask themselves what they are expecting here. The stock is up fourfold over the past five years even as the business has nearly stopped growing.
Apple hasn’t introduced many revolutionary new products since Steve Jobs died. The P/E ratio is already up to nosebleed levels. The company’s market capitalization is approaching 10% of total U.S. GDP. What more are you waiting for? Take advantage of extreme sentiment to lock in profits.
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: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 467.48.
The projected lower bound is: 417.96.
The projected closing price is: 442.72.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 88.4753. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 17 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 77.29. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 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 135.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 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 buy 3 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed up 1.590 at 440.250. Volume was 17% below average (neutral) and Bollinger Bands were 73% wider than normal.
Open High Low Close Volume 437.510 441.570 435.590 440.250 30,497,988
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 399.87 365.73 303.73 Volatility: 68 41 54 Volume: 45,824,336 36,336,668 37,851,724
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 44.9% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.
Our volume indicators reflect moderate flows of volume into AAPL.O (mildly bullish). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 3 periods. Our momentum oscillator is currently indicating that AAPL.O is currently in an overbought condition.