Three months after AAPL’s “breakout,” it faces its first real test. As we discussed in August [see: Engineering AAPL’s Breakout] the stock burst out of a long-term rising channel with the aid of several well-timed increases in its stock repurchase program.
Now, it’s time to backtest that mediocre 12%-per-year channel it’s been in since 2010 and embrace its new and improved 36%-per-year channel.
A drop to 200 or so wouldn’t do much to dent bulls’ enthusiasm. Even a likely drop to the SMA200, currently at 192.17, could be passed off as a base-building exercise. One key number in the middle is the open gap remaining at 195.96, a gap which would obviously be closed with a tag on the SMA200 and red channel bottom.
All of these scenarios presuppose that, like many of its FAANG cohorts, AAPL will disappoint at least a little. Clearly, the company could turn out some great numbers. But, with the market’s ongoing rally depending on AAPL’s results, anything more than a minor disappointment could do some real damage.
Bears probably shouldn’t get too worked up. Even if there were a disappointing number of people willing to shell out $1,500 for a fancier way of posting on Instagram or playing Fortnite, the company could always expand their buyback program by another $100-200 billion.
If the SMA200 doesn’t hold, AAPL will have some important decisions to make re buybacks. The next significant support is way down at 144.48.
Stay tuned.
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |