Trade tensions could prompt Chinese consumers to shift toward local smartphone brands — whether or not Apple Inc. (NASDAQ:AAPL) is forced to raise prices

Trade tensions could prompt Chinese consumers to shift toward local smartphone brands — whether or not Apple Inc. (NASDAQ:AAPL)  is forced to raise prices

Trade tensions could prompt Chinese consumers to shift toward local smartphone brands — whether or not Apple Inc. (NASDAQ:AAPL) is forced to raise prices

Apple Inc. shares are falling in Monday morning trading after HSBC warned that the smartphone giant’s issues in China aren’t going away “anytime soon.”

HSBC analyst Erwan Rambourg cut his target price on Apple shares AAPL, -3.13% to $174 from $180, writing that the company faces two big challenges in China due to trade-war issues. Chinese consumers may “accelerate” their adoption of local iPhone substitutes as trade tensions worsen, he said. And even those who wished to buy iPhones might have trouble doing so if a new wave of tariffs hits smartphones, which would likely prompt Apple to increase prices.

“We believe an escalation/elongation of the trade tension will likely have an impact on how Chinese consumers perceive U.S. branded products, chiefly iPhone and given that China plays a big role in terms of products and services revenue for Apple, this remains a key risk,” he said.

The stock is off 3% in morning trading Monday. Shares of several of the company’s suppliers are dropping as well as they start to comply with a U.S. order barring them from selling components to Huawei Technologies Co., a Chinese telecommunications giant.

Rambourg, who rates the stock at reduce, said its too early to get excited about several dynamics at Apple thought to be bullish catalysts for the shares. He questions whether the arrival of 5G connectivity will prompt a big wave of iPhone upgrades given the “slow-moving and scattered 5G rollouts” and argued that Apple will also have trouble cracking the Indian market even though the company has been reducing iPhone prices there.

“Although price cuts in emerging markets in order to align prices to the US levels or aimed at reducing the pricing gap versus the closest flagship phones from competition may help drive up interest, we think a price game may not be a good long-term strategy and may curtail margins,” he wrote.”

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 193.28.

The projected lower bound is: 173.31.

The projected closing price is: 183.29.

Candlesticks

A black body occurred (because prices closed lower 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 28 white candles and 22 black candles for a net of 6 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 42.8159. This is not an overbought or oversold reading. The last signal was a buy 6 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 32.76. 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 sell 10 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 -113.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 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 16 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed down -5.910 at 183.090. Volume was 31% above average (neutral) and Bollinger Bands were 68% wider than normal.

Open High Low Close Volume___
183.520 184.349 180.284 183.090 38,612,288

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

Moving Averages: 10-period 50-period 200-period
Close: 193.11 195.70 192.36
Volatility: 41 33 40
Volume: 36,624,828 30,616,814 34,677,444

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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
APPLE INC is currently 4.8% below 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 6 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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