Apple Inc. (NASDAQ:AAPL) Stock Moving Beyond Trade Worries
In the past few weeks, Apple stock dipped to less than $175. If the trade war between the U.S. and China escalates further, Apple would face significant headwinds. Goldman Sachs has forecasted that Apple could show a 29% decline in EPS if China bans Apple products. Recently, the U.S. administration has announced that tariffs on further $300 billion of imports from China could soon be announced. This would include almost all the products imported from China into the U.S., including all the Apple products.
Despite this threat, Apple stock has surged in the last few days to over $185. Again, one of the main reasons could be a higher buyback pace. Eventually, it is in the management’s hand on how fast they would like to pursue stock buybacks. But there can be huge short-term fluctuations in the stock price depending on this pace which might not be reflected by the fundamentals.
Future Buyback Story
In the latest earnings call, Apple’s management reiterated the claim that they are trying to reach a cash-neutral position. Apple has continued to show a big decline in the operating margin. In the recent quarter, Apple reported an operating margin of 23.12% . In the year-ago quarter, it was 26%. Hence, Apple has shown an operating margin decline of 288 basis points in the recent quarter. Trade worries continue to be a big challenge for the company.
From a fundamental point of view, few things have changed since the stock ducked below $145 in the last quarter of 2018. While there are a number of metrics which investors should watch to gauge the future momentum of Apple stock, the biggest factor will be the pace of buybacks.
Apple’s price movement is highly dependent on the pace of stock buybacks. The aggressive pace of buybacks helped the stock momentum in the second and third quarters of 2018, and a similar trend could be seen in the last quarter. At the same time, lower buybacks in the holiday quarter of 2018 was one of the reasons behind a 32% correction in that quarter. Apple made the highest quarterly buyback in the last quarter which helped in improving the bullish momentum for Apple stock.
Besides trade tensions, Apple stock is significantly dependent on the pace of buybacks in the near term. Investors should closely follow future buyback announcement to find an ideal entry point in Apple stock.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 188.90.
The projected upper bound is: 204.30.
The projected lower bound is: 184.20.
The projected closing price is: 194.25.
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 29 white candles and 21 black candles for a net of 8 white candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 88.3175. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 58.67. 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 6 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 buy 6 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 buy 5 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed down -0.620 at 194.190. Volume was 36% below average (neutral) and Bollinger Bands were 9% wider than normal.
Open High Low Close Volume___
193.950 195.970 193.385 194.190 18,253,188
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 184.58 194.40 190.13
Volatility: 30 33 40
Volume: 27,401,706 28,869,350 34,665,384
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 2.1% above its 200-period moving average and is in an downward 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 bearish on AAPL.O and have had this outlook for the last 22 periods.