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Christian Tharp, CMT

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Five Star Stock Watch: Apple

On Monday night, Apple released its earnings report and apparently Wall Street is not impressed with the company's forward guidance. Shares were down eight percent in after-hours trading.

Apple is sure to start Tuesday morning in the basement, but at what point should investors expect the stock to hold ground? Or the selling to accelarate lower?

The company: Apple, Inc.

Ticker Symbol: (NASDAQ: AAPL)

Sector: Consumer Goods  

Industry: Electronic Equipment

Apple Inc. and its wholly-owned subsidiaries design, manufacture, and market mobile communication and media devices, personal computers, and portable digital music players worldwide. It also sells software, services, peripherals, networking solutions, and third-party digital content and applications related to its products.

Please take a look at the 20-month chart of Apple below with added notations:

The stock broke out of the bottom of that pattern, and now it appears Apple's earnings will be the catalyst for a lower move.

The 200-day moving average (MA) can commonly act as support and resistance for a stock. Apple's drop, and any further selling therafter, needs to hold the 200-day MA or increased selling will most likely occur.

Apple isn't set to release earnings again until April 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Posted in: Earnings Education Long Ideas News Short Ideas Technicals Pre-Market Outlook Tech