technical analysis AAPL

Technical analysis of AAPL

AAPL, the representative CFD based on Apple Inc’s shares, has remained relatively stable throughout March so far. Earnings estimates have remained generally unchanged over the last few weeks, while recent news that Apple’s supplier Foxconn faces a shortage of materials has so far been discounted by participants. This technical analysis of AAPL takes a brief look at areas of importance on the daily chart.

Apple’s actual ratio of price to earnings (‘PE’) in 2020 was 37, making it overvalued by this measure but not nearly as much as various other big tech shares. PE for 2021 is expected to drop to about 27. Earnings in 2020 consistently exceeded expectations, with earnings per share (‘EPS’) for the fourth quarter at $1.68 on 27 January a particularly positive surprise.

On the chart itself, high resistance appears to be the all-time high of $145 from 25 January. Low support is less clear, but $110 seems to be a possibility or the psychological area of $100. For now, though, areas from moving averages and to a lesser extent the Fibonacci fan are likely to be in focus unless there’s a significant shift in the tone of fundamentals and sentiment before the next earnings release at the end of April.

Technical indicators on AAPL D1

 

Moving averages give a weak buy signal themselves, with each of the 50, 100 and 200 SMAs successively above slower lines. However, price is now within the value area between the 100 and 200 SMAs. Attempts to move above the 100 SMA this month have been rejected, so one might reasonably point to this around $126.30 as being an important local resistance. The 200 SMA around $117.50 is in view as a near-term support.

With movement having been fairly timid this month, there is no signal of saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5). However, both are slightly closer to oversold than neutral. Unusually for a CFD on an individual share, selling volume has been relatively high in March.

Price action and Fibonacci

 

The descending triangle from 23 February with its base around $118 would traditionally be taken as a sell signal by many traders. However, the 200 SMA is usually a strong barrier to downward movement on a daily chart, so those looking to sell from the current area must be careful to protect their positions against a downward fakeout.

Equally, there is for now no definite confirmation that the 61.8% zone of the weekly Fibonacci fan has been broken. While price has moved below it, movement has been limited with no clear uptick in selling activity. To the upside, the 50% fan might function as a resistance over the next few weeks, but the 100 SMA is likely to be an important resistance before price might reach the middle of the fan.

Technical analysis of AAPL: summary

 

The next key event affecting Apple’s shares is the company’s earnings report for the first quarter of 2021 which is expected on 29 April. The consensus estimate for EPS is 99c, with the 11 estimates ranging from 92c to $1.08; one estimate has been revised down in the last month. Before this, though, Friday’s NFP is likely to generate volatility at least in the short term for most financial instruments including AAPL.

Overall, the technical picture for AAPL suggests consolidation within the value area between the 100 and 200 SMAs over the next few days in the absence of significant new fundamental or sentimental drivers. As with most large-cap shares, the bias in the long term is towards the upside.

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