24/7 Wall St.

Apple Inc. (NASDAQ: AAPL) may be down on its luck ahead of earnings, but this is going to be one of the most widely followed earnings reports that there is.  After all, Apple is now the largest company in the world by market capitalization.  The stock has been battered and bruised ahead of earnings and every technician has a reason to have some worry right now.

Apple’s chart was incredible with gains of 50% in 2012 alone, at least before the pullback.  If today’s pre-earnings drop holds up then Apple’s share price will have been down 10 of the last 11 trading sessions.  You have to look long and hard for that to have been seen.  Here are the Thomson Reuters consensus price targets:

March quarter: $10.06 EPS on $36.81 billion in sales

June quarter: $9.93 EPS on $37.4 billion in sales

Fiscal-2012: $44.47 EPS on $161.14 billion in sales

Fiscal-2013: $51.07 EPS on $191.54 billion in sales.

A report on CNBC earlier today put some ‘whisper numbers’ for product sales as follows: 33 million iPhones, 13 million iPads, and 4 million Mac units. Apple is a shoe-in to now have over $100 billion in cash and short-term securities.

A review from Chartlabpro.com (trial here) shows that Apple’s chart is long-term bullish and medium-term very bullish, but short-term it is a bearish chart pattern.  In case Apple continues to sag after the earnings, Apple resistance levels from Chartlabpro.com are as follows: $559.99; $548.28; and $539.94.

Perhaps the biggest concern is that Apple’s chart has now broken under the 50-day moving average yesterday and then again today and that was the first such technical violation in 2012.  The 50-day moving average is $572.07 and to show how much it has risen the key 200-day moving average is all the way down at $441.04.

Apple options traders (using the monthly May expirations) appear to be braced for a move of up to $25 or so in either direction.

Whispernumber.com has an ‘earnings whisper’ of $10.49 EPS rather than the $10.06 from Thomson Reuters.  The company has a history of pleasing and it was the last quarter that was amazing when some were cautious ahead of that quarter as well.

What is interesting is that Microsoft Corporation (NASDAQ: MSFT) used to have a larger market cap and now trades at less than half of that peak.  Still, its recent performance has held up better and the stock is still close to a multi-year high

Here is a consideration to make: MAYBE INVESTORS WANT A BAD EARNINGS REPORT!!!  Imagine the counter-take here for a moment.  Yes, it seems like blasphemy.  Apple shares are greatly under-owned by many investors and it seems that everyone is set to defend Apple over the long-haul even if it has stumbled of late.  Imagine if shares dropped 10% or so after today’s earnings.  How many investors would pile in after getting a $100 pullback from the highs.  Imagine how many analysts who just stepped all over their own feet to ratchet their price targets up higher and higher.  Those analysts would almost have to point to a longer product cycle and the upcoming Apple TV that is still a highly awaited unknown.

If today’s earnings report does fail to please the crowd, it seems hard to imagine that the end of this generational story has been seen.  Nothing rises in a straight line forever.

JON C. OGG