Earnings Play: Apple
Jason Lubin July 29, 2020 11:18 AM
Apple's 3Q earnings release is expected on Thursday day. Here is what to look out for.
On Thursday, after market, Apple (AAPL) is expected to release 3Q EPS of $2.07 compared to $2.18 the prior year on revenue of approximately $52.3B vs. $53.8B last year. The company develops and produces consumer electronics and on its current analyst consensus rating is 29 buys, 10 holds and 5 sells, according to Bloomberg.
From a technical point of view, on a daily chart, Apple's stock price has been relentlessly advancing since March 23rd and has been using the 20-day moving average as a strong support. On Thursday, July 23rd, price closed below the 20-day moving average support, a bearish signal. The RSI has been fading since mid-June, possibly showing bearish divergence, calling for caution. Price is currently holding just below the 20-day moving average. Since we are still in a bull market, we may see Apple's stock price chop around a bit before finding support at $355.00 and bouncing to retest the $384.00 level. If price can rise to the first resistance and break through it, we will likely see a push to retest the all time high at $400.00. However, if price cannot hold above $355.00, price will probably break below its 50-day moving average, a bearish signal that could send price back down to its $332.00 support. Since Apple is one of the big five companies holding up U.S. markets, a break below its 50-day moving average could have a large ripple effect on U.S. indices due to its market weight.
Source: GAIN Capital, TradingView
On a weekly chart, Apple's stock price is currently in an ascending broadening wedge pattern that began to form in early to mid-2019. An ascending broadening wedge pattern is often a bearish pattern that could be signaling a reversal is soon to occur. The RSI has made a lower high, even though price made a higher high, again possible bearish divergence. Therefore caution should be taken when speculating in Apple at these current levels.
Source: GAIN Capital, TradingView
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