Apple Inc. (NASDAQ:AAPL) investors are concerned that tariffs would cause the company to raise the prices of the iPhone

Apple Inc. (NASDAQ:AAPL)  investors are concerned that tariffs would cause the company to raise the prices of the iPhone

Apple Inc. (NASDAQ:AAPL) investors are concerned that tariffs would cause the company to raise the prices of the iPhone

As the trade war escalates, Apple Inc. (AAPL) shares are selling off at an alarming rate. The tech giant, which relies on China for almost 20% of its sales, plummeted by over 5% on August 5. The decline came after China responded to Trump’s tariff threats by allowing the Yuan to fall and suspending U.S. agricultural purchases. The 10% tariffs would be imposed on $300 billion worth of Chinese exports that had previously avoided duties.

Many investors are concerned that tariffs would cause AAPL to raise the prices of the iPhone and other products as well as affect shipment forecasts. However, one top analyst says not to worry. TF International Securities analyst, Ming-Chi Kuo, said on August 5, “Apple has planned ahead for the protracted trade war and should be able to offset the costs even with higher import costs.”

Is this enough to reassure investors of Apple’s standing given the uncertain economic climate?

Is AAPL Prepared for Tariffs?

The biggest question that investors want answered is whether or not APPL will take on the 10% tariff on assembled iPhones imported from China? Or if the cost will get passed on to consumers.  

The company already assumes the cost of all tariffs placed on certain iPhone and iPad cases imported from China. However, additional tariffs could cause earnings and margins to take a massive hit.

One analyst, Toni Sacconaghi, calculated that if AAPL eats the full cost, its earnings will drop 7% with margins also declining by 1.5 percentage points. “Apple will have to calculate how much iPhone sales will decline if it passes the cost of the tariff onto consumers. Anything larger than a 20% drop and Apple will be better off eating the cost of the tax itself. And ironically, there is a risk that China will also tax the iPhone as a U.S. import in retaliation,” the Bernstein analyst said on August 5. He gives AAPL a Hold rating and $190 price target, suggesting 2% downside.  

AAPL has a ‘Moderate Buy’ analyst consensus and a $222 average price target, suggesting 15% upside potential.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 197.08.

The projected upper bound is: 206.28.

The projected lower bound is: 188.44.

The projected closing price is: 197.36.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 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 9.7905. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 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 42.14. 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 44 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 -169.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -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 sell 2 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 3.660 at 197.000. Volume was 32% above average (neutral) and Bollinger Bands were 23% narrower than normal.

Open     High      Low     Close     Volume___
196.310 198.067 194.040 197.000 35,824,788
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 205.77 197.72 186.28
Volatility: 40 29 40
Volume: 35,450,824 25,539,300 33,009,610

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 5.8% above its 200-period moving average and is in an downward 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 volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AAPL.O and have had this outlook for the last 2 periods.

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