Apple Inc. (NASDAQ:AAPL) Marches Toward $2 Trillion Valuation

Apple Inc. (NASDAQ:AAPL) Marches Toward $2 Trillion Valuation

Apple Inc. (NASDAQ:AAPL) Marches Toward $2 Trillion Valuation

Apple’s market capitalization is $1.4 trillion, and the stock is at an all-time high. Yet, a number of analysts believe that this year’s 8% increase is only the start of a drive which will take it to $2 trillion.

These analysts believe that one key to a further rise is Apple’s services business, which is discussed further below. Another argument is that the cycle between when people turn in their current iPhone for another is shortening. If this is true, it could drop below a year. The advent of 5G could help this as people upgrade to phones which will work on the faster network.

Apple will report earnings on the 28th of this month. Apple’s most recent earnings statement left a lasting, positive impression with investors. The company posted earnings of $3.05 per share, up from $2.94 last year. Forecasts for the holiday quarter were strong. The iPhone 11 was only available for part of last quarter, so its sales results should improve in the current one. Some experts believe that Apple TV+ will do well in the streaming wars as it adds new, original content. The new U.S. trade deal with China means that Apple will not have to pay more for certain components in its products. The levies could have added $150 to some of its computers and smartphones. There are rumors that Apple will release as many as six models of the iPhone 12, some of which will work with new, superfast 5G networks.

Apple’s share price increase rode the back of two developments for most of the last year. The new iPhone 11 did better than expected, although the numbers are speculation by experts and not data provided by Apple. The other is that Apple’s bet on services as an alternative to flagging hardware sales produced unexpectedly robust results. Its services business numbers crushed expectations for the latest quarter. Its revenue set a record at $12.5 billion, against Apple’s total company revenue of $63 billion. Services as a percentage of total revenue are expected to continue to rise.

The release of the iPhone 11 in September was the tonic that the stock needed. Shares sold down sharply in mid-summer after Apple announced its earnings. The mainstay of revenue had continued to weaken as the iPhone X series did poorly, particularly in China. The trade war also dragged on the stock, as anxiety about Apple supply chain interruptions grew. Apple sources many parts of the iPhone from companies in China. iPhone 11 sales were enough to alleviate any worry along these lines.

The launch of Apple TV+ is critical to the new strategy. Apple already has a huge music store. Its app store is by far the largest in the industry. By some estimates, more than 130 billion apps have been downloaded since the store began. Many experts believe that app sales cannot continue to grow at rates they have over the past decade. So video streaming becomes an essential part of the expansion of this multimedia business.

All this means that Apple’s bet on TV is absolutely critical. At $4.99 for the first month, after a seven-day free trial, the service is aggressively priced compared to industry leaders Amazon and Netflix, which have price points of $12.99 a month. Apple’s management has gambled that, although its library of content is limited compared to the leaders, the low price, the Apple brand and the hundreds of millions of iPhones, iPads and Macs in the world are a huge base to which it can market its streaming service. A JPMorgan analyst recently predicted that Apple TV+ and Apple’s ad business would add $25 billion in revenue in 2025.

Confidence has grown that Apple’s new iPhone 11 and services strategy is the right formula. It recently was named the most valuable brand in the world again.

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 286.10.

The projected upper bound is: 328.66.

The projected lower bound is: 311.27.

The projected closing price is: 319.96.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 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 71.3186. This is not an overbought or oversold reading. The last signal was a sell 2 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 78.76. 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 35 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 101.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 23 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 3.490 at 318.730. Volume was 25% above average (neutral) and Bollinger Bands were 81% wider than normal.

Open     High      Low     Close     Volume___
316.270 318.740 315.000 318.730 34,454,116
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 309.63 279.62 226.22
Volatility: 21 19 29
Volume: 33,176,950 27,330,704 27,322,678

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 40.9% above its 200-period moving average and is in an upward trend. Volatility is 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 104 periods. Our momentum oscillator is currently indicating that AAPL.O is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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