APPLE – No Longer a Growth Stock ?

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APPLE, Daily

We all have an opinion on Apple, one of the world’s largest corporations and most recognized brands, and they are loved and loathed in equal measure it seems.  They report their second quarter earnings today after the close of the New York stock exchange and the numbers are expected to be poor. It is likely to report its first year-over-year decline in iPhone sales since the product was launched in 2007.  The iPhone now accounts for over 65% of all Apple revenues and with sales of other products such as the iPad and MAC already slowing and Apple Watch seemingly being out sold by competitors the emphasis is more focused on the software and services platforms.

Apple TV was delayed last year, the tie up with IBM and Cisco to break in to the corporate market (along with the iPad Pro) seems to have stalled, the normal rally in the share price along with strong sales in the final quarter of 2015 did not materialize, and analysts are rather skeptical following poor first quarter earnings in January.

The charts are also telling a similar story. The share price closed yesterday at 104.92 – right on the lower Bollinger band of the Daily chart and the 38.2 Fib level, next support is at 104 (50 DMA) , 102.50 (50 Fib) and 100.00 (61.8 Fib and Psychological round number).

The Weekly chart looks equally bearish with the 20 MA and 50% Fib retracement offering support at 102. 53.

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On the upside 108 and 113 would need to be broken to reestablish the uptrend, with strong resistance at 118.

Let’s see how the numbers are received by the market today, before we take any action. There is often significant over reaction (both positive and negative) in the immediate aftermath of earnings announcements as we saw with Alphabet (Google) and Microsoft last week. Apple is always one to watch because of the sheer size of the company, its track record and the impact it can have on the overall US indices.  It is probably too early to be calling time on Apple as a growth stock, but time will tell.

 

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Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

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