Speculators can potentially buy Apple Inc. (NASDAQ:AAPL) to profit from a trade-war resolution, but Apple stock still faces longer-term risks

Speculators can potentially buy Apple Inc. (NASDAQ:AAPL) to profit from a trade-war resolution, but Apple stock still faces longer-term risks

Speculators can potentially buy Apple Inc. (NASDAQ:AAPL) to profit from a trade-war resolution, but Apple stock still faces longer-term risks

For over a decade, Apple’s iPhone dominated the smartphone space, naturally causing AAPL stock price to spike. At the time, no one cared that the iPhone represented the lion’s share of the company’s global revenue. As long as customers kept buying iPhones – and they did – this unbalanced allocation was an asset.

But with “peak smartphone” negatively impacting the entire industry, AAPL needed fresh ideas. However, I argued that it hasn’t been able to keep pace with its competitors. The company badly lost out in the smart-speaker battle to Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Even “second-thought” Sony (NYSE:SNE) has started to flex its consumer-tech muscles.

That said, the year is still young, giving management the opportunity to right the ship. Since the year began, Apple stock has gained over 13%. Is this the time to buy AAPL stock or should burned investors remain cautious?

Geopolitical Tailwind for Apple Stock

I’m still very much concerned about the impact of Apple’s fundamentals on Apple stock price. Although AAPL is trying to tap other growth opportunities, its bread-and-butter remains the iPhone. Since smartphones have become commoditized, Apple needs to find a new game-changer for AAPL stock price to move decisively higher.

Nevertheless, I believe that Apple stock provides viable, nearer-term opportunity for speculative buyers and swing-traders. Early this year, Apple CEO Tim Cook essentially blamed the Trump administration for poor iPhone sales in China. Cook stated, “It’s clear that the economy began to slow there in the second half and I believe the trade tensions between the United States and China put additional pressure on their economy.””

However, that headwind will likely fade into the background. A recent thawing in U.S.-China relations may indeed result in a permanent resolution. The generally positive recent action of the U.S. stock market suggests that Wall Street is optimistic about a U.S.-China deal. Speculators can buy Apple stock ahead of a likely deal, and potentially profit handsomely from the transaction.

One of the silver linings of the Trump administration’s high-profile failure to securing a North Korean denuclearization agreement is that it’s extra-motivated to get something, anything going.

One of the most prominent, likely prizes for the administration is ceasing the painful U.S.-China trade war. Such an agreement could boost Apple stock by a hefty amount.

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 173.67.

The projected upper bound is: 187.62.

The projected lower bound is: 164.47.

The projected closing price is: 176.05.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

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 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 56.3637. This is not an overbought or oversold reading. The last signal was a sell 15 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 64.85. 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 39 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 132.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 sell 2 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 0.880 at 175.850. Volume was 30% below average (neutral) and Bollinger Bands were 74% narrower than normal.

Open High Low Close Volume___
175.690 177.750 173.970 175.850 27,436,204

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 173.44 161.87 191.08
Volatility: 12 48 38
Volume: 22,956,674 35,793,812 32,612,828

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 8.0% below 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 25 periods. 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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