Earnings Play: Apple

Apple's 3Q earnings release is expected on Thursday day. Here is what to look out for.

Tech (2)

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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