We were surprised to see a figure in Point & Figure charts, although if we use simple peaks and lows for the $365 peak and a recent $330 floor, a technician would say that $295 is not out of the question. That Point & Figure target from StockCharts.com in the gallery view shows a 3 box reversal chart and its downward price objective is $292.00.
It should be noted that Apple’s 200-day moving average is now currently $304.42 and its 50
-day moving average is $347.87. Apple has not violated its 200-day moving average on the downside since the V-shaped recovery took hold in 2009. The real last 200-day violation was in late 2008 when tech stocks hit skid row.
OK, there is still some good news here for the bulls. First and foremost, Apple remains a favorite and is Wall Street’s darling stock. The company’s products have yet to miss a beat and even the troubles that have come up have yet to hamper demand.
Another positive is that Apple’s stock is not expensive, and it is arguably cheap. The stock trades at 15-times 2011 earnings estimates and just under 13-times 2012 earnings estimates. It also sits on a cash arsenal of more than $50 billion. Options volume was more favorable to call-options than to put-option buying despite the rebalancing news on Tuesday.
Another positive is smoothing out the time periods with weekly charts, where the full gallery shows that this is not yet showing significant violations longer-term. Even at $338.89, Apple’s 52-week range is listed as $199.25 to $364.90 and that gives the bulls more room to say that Apple is still strong. Analysts still have a consensus price target objective above $424.00 and there are still some calls for more than $500.00 in the coming years. One last positive is that Apple’s rebalance woes from the NASDAQ 100 Index changes were actually much less at the end of trading on Tuesday than what had been projected in early morning trading with a $338.89 close versus a $336.99 open and a low of $336.00 on the day.
Some news making the rounds so far is also that Apple got a key patent case jury verdict overturned by a judge this week. That eliminated what had been an order for Apple to pay $625.5 million in damages, and that in turn may hurt other patent cases against Apple.
Our aim here is not Apple-bashing. It is simply to explain the charts and show what fundamentals are acting against Apple and which are still positive in Apple’s favor.
We are now within two weeks of earnings as Apple is scheduled to report its earnings on Wednesday, April 20, 2011 after the close of trading. Apple’s share trading in Europe was too thin and the drop is too small to have any real feel for Apple indications this Wednesday morning. So far we have seen Apple shares trade up as much $1.00 in very early bird pre-market trading indications this Wednesday morning.
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JON C. OGG
