Apple Inc. (NASDAQ:AAPL) Extends Rally, Solidifying 2019 as Best Year in a Decade

Apple Inc. (NASDAQ:AAPL) Extends Rally, Solidifying 2019 as Best Year in a Decade

Apple Inc. (NASDAQ:AAPL) Extends Rally, Solidifying 2019 as Best Year in a Decade

Apple shares rose on Thursday, hitting their latest in a series of record highs as the iPhone maker remained on track for its best annual performance in a decade.

The stock rose as much as 1.6% in the first U.S. trading day after Christmas, when markets were closed. Contributing to the positive tone, early reads on spending in the holiday shopping season have been strong, and Apple products — notably its AirPods and iPhone — were widely cited as “must-have” items on customer wish lists, according to an Evercore ISI survey.

Thursday was poised to be the third-straight daily gain for the stock. Apple closed lower only five times in 18 trading sessions this month through Thursday. December’s month-to-date gain of more than 7% has Apple on track for its 10th positive month of 2019.

The rally has produced a gain of more than 80% this year for the largest publicly traded U.S. company and added about $530 billion in market value. That gain is more than the market capitalizations of all but five companies in the S&P 500 Index and twice the market value of Intel Corp.

Almost 10 years ago, Apple closed out 2009 with an annual surge of almost 150%, as stocks began recovering from the financial crisis. The company’s 2019 rally easily tops the nearly 30% gain in the S&P 500, as well as the rise seen in other mega-cap names. Microsoft Corp. is up more than 55% this year, while Amazon.com Inc. has gained about 23%, or less than a third of Apple’s advance.

Apple wasted no time this year putting in what would prove to be a 2019 bottom. It struck a decidedly negative note on Jan. 2, cutting its revenue outlook for the first time in almost two decades. The news spurred a massive sell-off, but shares quickly rebounded and moved consistently higher throughout the year. Signs that trade tensions between the U.S. and China were easing have provided a steady macroeconomic tailwind for the shares.

The Cupertino, California-based company “started the year with a surprise negative pre-announcement that was followed by bearish sentiment on the stock due to slowing iPhone units, lack of a clear 5G strategy, and U.S.-China trade tensions,” Cowen analyst Krish Sankar recalled in a Dec. 17 report. “That sentiment turned positive” in the second half of the year.

Sankar credited the turnaround in sentiment to growth in Apple’s services business, a division that has been in focus with the launch of a streaming-video product and a subscription-based video game offering. More importantly, Wall Street is looking ahead to the expected launch of a 5G iPhone in 2020, and growing more optimistic about its potential. Multiple firms have recently raised their price targets on the stock, with the next generation of Apple’s most important product line broadly cited as a reason.

In addition to Cowen, which raised its target to $325 from $290 earlier this month, Piper Jaffray cited 5G excitement when it boosted its target by $15 last week. On Monday, Wedbush lifted its target to a Street-high view of $350, predicting the next-generation iPhone — expected to be a bigger advance in speed and functionality than the iPhone 11, which also performed stronger than many were expecting — would “open up the floodgates” on device upgrades. In 2019, the iPhone accounted for about 55% of Apple’s total revenue.

The average price target for Apple shares stands at about $268, which implies downside of about 7% from where it has been trading. Despite that, Wall Street remains broadly positive on Apple, with 28 firms recommending investors buy the stock. To compare, 14 firms have neutral ratings, while seven advocate selling.

An upcoming test for Apple shares will come in late January, when it is expected to report its first-quarter results. Analysts are looking for earnings growth of more than 8%, along with revenue growth of 4.5%. It is expected to sell about 66.7 million iPhone units in the quarter, per a Bloomberg MODL estimate, which reflects year-over-year growth of about 0.8%. The average selling price for the iPhone is expected to be $781.35, down 4.1% from the year-ago period.

Technical Indicators

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 261.53.

The projected upper bound is: 299.20.

The projected lower bound is: 282.80.

The projected closing price is: 291.00.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 34 white candles and 16 black candles for a net of 18 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 95.9896. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 3 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 78.68. 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 20 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 130.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 5.640 at 289.910. Volume was 11% below average (neutral) and Bollinger Bands were 42% wider than normal.

Open     High      Low     Close     Volume___
284.820 289.980 284.700 289.910 23,334,004
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 280.43 261.73 217.59
Volatility: 16 20 29
Volume: 31,134,272 24,757,478 27,255,120

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.

Summary

APPLE INC is currently 33.2% 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 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 89 periods. Our momentum oscillator is currently indicating that AAPL.O is currently in an overbought condition.

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