Apple Inc. (NASDAQ:AAPL) facing multiple negative catalysts
Apple (NASDAQ:AAPL) stock bulls are overlooking multiple, large negative catalysts that the company is facing in the short-to-medium term. Given these strong headwinds, many of which are interrelated and feed on each other, the Apple stock price will probably be significantly lower in six months from where it is now.
With all that in mind, here are the four headwinds bearing down on AAPL stock that investors need to keep in mind, as each could put a significant dent in the company’s stock in the months ahead.
The Chinese-made smartphones are reportedly gaining ground in markets outside the U.S. in general and developing markets in particular, including China, India and Southeast Asia. Apple CEO Tim Cook said that the company’s revenue from China rose 16% year-over-year, but there are numerous reports of weak iPhone demand in China, suggesting that AAPL’s business in the Asian country will deteriorate going forward. In fact, anemic iPhone demand in China could be a key reason for AAPL’s weaker than expected first-quarter guidance.
That probably explains why, as Cook admitted on the company’s earnings call, Apple has been “seeing pressure” in a number of emerging markets, including Turkey, India, Brazil and Russia. And while Cook tried to blame the weakness on currency fluctuations, that’s probably an excuse and not the real reason for the company’s problems in developing markets.
Moreover, the company’s problems in developing markets are going to get worse if it continues to follow its strategy of raising prices. Such a strategy will exacerbate the price gap that’s hurting the iPhone’s sales in emerging markets.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 203.20.
The projected upper bound is: 187.98.
The projected lower bound is: 159.29.
The projected closing price is: 173.64.
A white body occurred (because prices closed higher 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 25 white candles and 25 black candles.
A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with APPLE INC) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with APPLE INC) it is called a bullish hammer.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 9.2721. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 5 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 29.56. This is where it usually bottoms. 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 56 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 -121.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 34 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed up 2.330 at 174.620. Volume was 100% below average (consolidating) and Bollinger Bands were 153% wider than normal.
Open High Low Close Volume___
174.240 174.950 170.260 174.620 173
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 184.47 211.77 194.23
Volatility: 49 44 33
Volume: 40,672,092 37,708,188 31,577,794
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 10.1% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of AAPL.O (mildly bearish). Our trend forecasting oscillators are currently bearish on AAPL.O and have had this outlook for the last 32 periods. Our momentum oscillator is currently indicating that AAPL.O is currently in an oversold condition.