Apple Inc. (NASDAQ:AAPL) Playing hardball

Apple Inc. (NASDAQ:AAPL) Playing hardball

Apple Inc. (NASDAQ:AAPL) Playing hardball

Apple has reportedly asked each of its largest suppliers to evaluate the costs to shift between 15% and 30% of its production out of China to other countries in Southeast Asia, according to a report by the Nikkei Asian Review. The company made this request to Foxconn, Pegatron, Wistron, and others, as Apple is considering a massive restructuring of its supply chain in the wake of the trade war. The events of the past year have hammered home the risk of relying too heavily on China for its production. 

In May, President Trump threatened to impose another $200 billion worth of tariffs on additional products from China, after already slapping $250 billion in levies on a previous list of goods. On several occasions over the past year, the countries have alternately signaled they were nearing a deal or imposing new penalties, but neither side has yielded to the other’s demands.

Hopes for a trade agreement were stoked again this week when Trump tweeted that he had a “good telephone conversation with President Xi of China,” and that the two would have an extended meeting during the G20 Summit in Japan next week. 

Big ships take time to turn

Apple’s massive operations in China have taken decades to set up, so any actions the company eventually takes to relocate manufacturing facilities certainly wouldn’t happen overnight. Apple has built an “extensive and complex ecosystem of components, logistics, and talent” around its operations, according to the Nikkei Asian Review report. Duplicating them will take time and money.

The iPhone maker is considering a number of countries to diversify its operations, including Mexico, India, Vietnam, Indonesia, and Malaysia — with India and Vietnam emerging as the front-runners. Any move to get manufacturing up and running at a new location would take at least 18 months once a site has been chosen.

No turning back

Moving even just a portion of its manufacturing would be a costly step, both for Apple and for China. Once the wheels are in motion, there may be no going back. Apple employs about 10,000 Chinese directly and an estimated 5 million jobs in China rely in some way on the company, so this talk of Apple moving could be a calculated effort by the company to pressure officials in Beijing to make a trade deal. In a note to clients, Wedbush analyst Daniel Ives said, “We believe this is all a poker game and Apple will not diversify production out of China overnight.”

There would be some initial costs to diversify its manufacturing, but, over the longer term, the company would benefit from not having all its eggs in one basket.

Your move, China…

Overall, the bias in prices is: Upwards.

The projected upper bound is: 207.91.

The projected lower bound is: 187.74.

The projected closing price is: 197.83.

Candlesticks

A black body occurred (because prices closed lower than they opened).
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 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 72.9505. This is not an overbought or oversold reading. 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 62.16. 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 11 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 90. This is not a topping or bottoming area. 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 10 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed down -0.580 at 197.870. Volume was 24% below average (neutral) and Bollinger Bands were 37% wider than normal.

Open High Low Close Volume___
199.680 199.880 197.310 197.870 21,124,236

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 193.40 194.30 189.51
Volatility: 21 33 40
Volume: 22,739,810 28,733,756 34,490,152

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 4.4% 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 volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 4 periods.

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