Chart Of The Day: After Apple Beat On Earnings, Here's The Trade
Investing.com | Jan 29, 2020 15:06
According to yesterday's report, Apple's holiday season earnings hit new records, and the company's iconic iPhone, whose popularity was once considered to be fading, made a comeback.
Apple (NASDAQ:AAPL) is up $6.22, or 1.96% in the premarket. It beat on both EPS, which came in at $4.99—though $4.54 was expected—and revenue, which came in at $91.82 billion, besting the $838 billion forecast. Remarkably, too, out of 26 times the company's EPS has been reported, it has missed only once. More impressive still: results beat both headline numbers for the same quarter in the previous year.
Though the market may have once eulogized the iPhone, revenues from the smartphone make up more than half of the company’s sales. This year they totaled $55.96 billion, an increase of more than 7% YoY.
Moreover, management presented a positive outlook, while indicating that the coronavirus outbreak in China gives the company less visibility than it would normally have.
Of course, fundamental events such as geopolitical jitters, future negative guidance or even language missteps by the Fed or other high-profile global central banks could weigh on markets, including Apple shares. But right now, at least based on its technicals, the stock looks set to outperform.
Among the tech giants currently reporting earnings, Apple’s stock has fared well during the general selloff. Amazon (NASDAQ:AMZN) dropped 4.45%, though yesterday’s rally pared the loss to 2.69%. Facebook (NASDAQ:FB) lost up to 4.13% of value, although yesterday's rebound trimmed that to a 2.02% loss. Microsoft (NASDAQ:MSFT) slumped 2.88%, which shrank to 0.98% lower as of yesterday.
Apple, however, which lost up to 3.28% from the record high of $323.32 it reached on Jan. 24, has now regained almost all its losses. Price has returned above its most recent uptrend line since the Dec. 3 low.
Yesterday, ahead of the company's earnings report, it was a comfortable 0.48% below its record. Premarket trading suggests a new record will be hit today during the U.S. session.
That said, both RSI and MACD topped out, providing sell signals. Therefore, conservative traders should stay out of the upcoming rally before price returns to its uptrend line.
h2 Trading Strategies/h2Conservative traders should wait for a return to at least $250, then wait for proof of demand.
Get The App
Moderate traders may go long upon a correction to the $300 level or thereabout, upon signs of a consolidation.
Aggressive traders could enter a contrarian short position after recognizing resistance throughout the session.
Trade Sample – Short Position Setup
- Entry: $325
- Stop-Loss: $330
- Risk: $5
- Target: $310
- Reward: $15
- Risk:Reward Ratio: 1:3
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.