Apple Backing Off After Dragging The Market Higher In Recent Weeks

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Shares of Apple Inc. AAPL have been the definition of market leaders in recent weeks and months, as its 20 percent rally since January 9 has given the broader market the energy needed to shake off a miserable January performance. Can the good times for Apple bulls continue and continue giving the market a boost?

What The Bulls See

• Reasonable valuation metrics: A price to sales ratio of only 3.8, an enterprise value of $752 billion that surprisingly trumps the market capitalization of $748 billion and a P/E ratio of only 14.95 versus the 22 being sported by the S&P 500.
• A clean balance sheet: Cash of over $30 billion on hand, a ratio of over one and a long-term debt-to-equity ratio of only 29.59 percent.
• The "must-have" products in their space.

What The Bears See

• A relatively pricey price-to-book ratio of over six.
• An increasingly large crowd of competitors in most of its product lines.
• The possibility of the law of large numbers coming into play with this technology behemoth.

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The Technical Take

Technicians note that Apple shares hit the upside projected target, based on the upper edge of the short-term uptrend channel (see the solid uptrend lines on the chart) at $133 last week and subsequently backed off by around $4.50. Right now, first support comes in at the broken upper edge of the previous long-term uptrend channel (see dashed uptrend lines) at around $125.70.

Additional support comes in at the lower edge of the short-term uptrend channel at around $114.16. Above $133.67, it's open air for Apple shares.

Overall

Apple may be in for more of a pause, especially if the market consolidates for a bit after the nice February upside. Those long of Apple shares don't seem to have much to worry about right now, outside of another few percent lower before more buying starts up. Those not yet long of Apple may soon be on the lookout for the next dip.

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Posted In: Long IdeasTechnicalsTrading IdeasApple
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