Apple Inc. (NASDAQ:AAPL) Due for Pullback
Shares of Apple (NASDAQ:AAPL) are up 40% year-to-date compared to the Invesco QQQ ETF (NASDAQ:QQQ) which is up 23% and the SPDR S&P 500 ETF (NYSEARCA:SPY) which is up 19.3%.
With a large run up in the stock this year, the logical question for investors to ask is how much more upside there is in the short term and the intermediate term?
The answer to that question can be found by looking at the prospects of the iPhone upgrade cycle, the future pace of share repurchases and the current dividend yield.
iPhone Upgrade Cycle
The next generation of iPhones is on sale and according to analysts, there appears to be strong demand for the iPhone 11, which carries a price tag of $699. One of the major selling points is a better camera and the fact the iPhone 11 comes with a price tag that is $50 lower than the $749 price tag of last year’s iPhone XR. CNBC reported that JPMorgan estimates 184 million iPhone shipments in 2019 and 195 million shipments in 2020. If the estimates for 2020 are correct, the increase in iPhone shipments should help cover the likely lower margins because of the $50 lower selling price and increased costs from tariffs throughout the iPhone supply chain.
The one caveat to strong demand for the latest versions of the iPhone is what consumers are thinking about a 5G iPhone that will likely come out next year. I do not see a large number of people holding out another year for the 5G iPhone since there are a limited number of areas that currently have 5G. I expect that people who upgrade now — along with other consumers — will hold out to upgrade in 2021 when a second-generation 5G iPhone will likely be released. By then 5G will be much more prevalent.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 207.32.
The projected upper bound is: 231.36.
The projected lower bound is: 209.09.
The projected closing price is: 220.22.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 38.3114. This is not an overbought or oversold reading. The last signal was a buy 1 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 57.57. 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 buy 80 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 14. This is not a topping or bottoming area. 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 3 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed down -1.140 at 219.890. Volume was 28% below average (neutral) and Bollinger Bands were 8% narrower than normal.
Open High Low Close Volume___
220.000 220.940 218.830 219.890 19,088,312
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 219.81 210.11 189.08
Volatility: 20 34 36
Volume: 27,753,930 28,615,990 30,174,922
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 16.3% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 26 periods.
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