Apple Inc. (NASDAQ: AAPL) is covered almost every hour by the financial media and reported on by outside websites quite literally thousands upon thousands of times each and every day. Today is reckoning day as the consumer electronics giant and largest company by market cap is due to report earnings after the close of trading.
Thomson Reuters has a consensus forecast of $13.44 earnings per share (EPS) and a gain of 18% in sales to $54.73 billion. For the current quarter’s guidance, Thomson Reuters has a consensus grouping of $11.70 EPS and $45.63 billion in revenue, for 16.4% expected sales growth. Wall St. will be focused on margin compression.
What investors need to care about the most is that Apple’s fundamental growth story remains, but its stock is broken and similar to peaking trends seen in many past great tech stories. It closed at $504.77, and its 52-week trading range is $443.14 to $705.07. Analysts have been lowering their price targets regularly of late, and the consensus price target from Thomson Reuters is now just under $710.00 for one-year from now. Apple is still worth some $475 billion in market value.
Apple’s chart peaked in September, and it has been considered a broken stock since it fell below the 200-day moving average at the start of November. The stock tried to make another challenge of that 200-day moving average over the next month and failed. That level now is listed as $590.60. When Apple broke and failed at the 200-day moving average, that was effectively the first test and failure in about three years. Apple also has been unable to get back above its 50-day moving average either, and that level is now $536.46.
As we have maintained before, Apple has dead air under the $500 share price, if that level does not hold. If a failure is seen, Apple’s prior price moves would leave nothing but air down to $440, or even as low as $425, before the next serious support area can be found. Options traders seem to be braced for a move of close to $25 in either direction.
Stay tuned for earnings. Everyone else will be!