Charged Up For A Blue Sky Run? How Apple Stock Looks Going Into Earnings
Apple Inc (NASDAQ:AAPL) is set to print its third-quarter 2021 earnings on Tuesday after market close and on Monday morning the stock was running up into the event, flirting with its July 15 all-time high of $150.
Often when a stock runs up prior to its earnings print it results in a "sell the news" event. On Friday’s CNBC "Power Lunch," Stephanie Link noted Apple isn’t up as much, year-to-date, as its peers Microsoft Corp (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOG). Apple is widely expected to beat earnings estimates, but Link advised investors to pay attention to the tech giant’s guidance.
After Apple’s second-quarter earnings print, the analyst consensus estimate stood at $68.94 billion in revenues with an EPS of 82 cents. As the quarter has progressed analysts have increased their projections. UBS now expects revenues to $74.7 billion, up from previous forecast of $71.3 billion, and an EPS of $1.01 versus the 95 cents estimated earlier.
Although traders and investors holding Apple stock or options through its earnings print are taking an increased risk, for purely technical traders Apple’s chart indicates higher prices are in the cards.
The Daily Apple Chart: On Monday morning, Apple’s stock surpassed Friday’s high and made a run up toward newly made resistance at the $150 level. The stock has demonstrated sustained strength since it gapped down on July 19 amid overall market weaknesses due to COVID-19 Delta variant concerns and is trading in a defined uptrend on the four-hour chart. If Apple sells off after its earnings print, traders will want it to hold above the $141 level to not lose its uptrend on the daily chart.
Apple is trading above both the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending above the 21-day EMA, both of which are bullish indicators. Apple is also trading well above the 200-day simple moving average, which indicates overall sentiment in the stock is bullish. All three moving averages have also curled upwards, which indicates higher prices may come.
Bulls will want to see Apple reach a new all-time and for bullish follow through to give the stock a blue-sky run. For traders using options to play Apple through its earnings, it could be ideal for the stock to consolidate under the $150 mark on Monday and Tuesday for better odds Apple reacts positively to an earnings beat.
Bears want to see a negative reaction to Apple’s results and for the stock to lose support of the eight-day EMA. Below the eight-day EMA Apple has price history support at $145, $141 and $135.
AAPL Price Action: Apple was trading up 0.5% to $149.42 at publication time.
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