Market News & Analysis


Top Story

Apple post earnings hangover - risk of corrective decline

U.S. technology giant bellwether, Apple has posted stellar fiscal Q4 earnings numbers that beat expectations. In addition, Apple has given a rosy guidance on potential stronger sales for its wearables; Air Pods and services for the upcoming holiday season. The share price of Apple has rallied by 3% in after-hours trading that saw a spike to 252.50 (above its current all-time high printed on 249.76 printed on 29 Oct) before it drifted down lower to settle at 248.19.

My colleague, Ken Odeluga has written an earning preview report on Apple earlier (click here for a recap).

Right now, we will decipher share price movement of Apple from a technical analysis perspective.

Medium-term technical outlook of Apple (AAPL)



click to enlarge charts

Key Levels (1 to 3 weeks)

Pivot (key resistance): 255.10

Supports: 232.10/230.00 & 215.30

Next resistance: 270.20/271.60

Directional Bias (1 to 3 weeks)

Bearish bias below 255.10 key medium-term pivotal resistance for a potential mean reversion/corrective decline to target the 232.10/230.00 support zone.

On the other hand, a clearance with a daily close above 255.10 sees an extension of the impulsive upleg towards the next resistance at 270.20/271.60 (Fibonacci expansion cluster)

Key elements

  • Since its major low of 142.00 printed on 03 Jan 2019, AAPL has staged a steep rally of 76% to print a current all-time high of 249.76 printed on Tues, 29 Oct (normal U.S. session).
  • Current price action is now coming close to a significant resistance zone of 252.50/255.10 which is defined by an intersection point of the upper boundary of a primary ascending channel from May 2016 low, upper boundary of a major ascending channel from 03 Jan 2019 and upper boundary of a medium-term ascending channel from 03 Jun 2019 low. The 252.50/255.10 resistance zone also confluences with a Fibonacci projection cluster.
  • Elliot Wave/fractal analysis suggests that the AAPL is still evolving within an intermediate degree impulsive wave 3/ sequence, in place since 03 Jun 2019 low of 170.27. Right now, it is likely that it has or coming close to complete the minor degree bullish impulsive wave 3 in place since 05 Aug 2019 low of 192.58 within the longer-term wave 3/ sequence. Thus, AAPL is now at a potential minor reversal point where it may shape a multi-week corrective wave 4/ sequence before another impulsive upleg materialises.
  • Momentum indicators are also advocating a potential mean reversion decline. The weekly RSI oscillator has reached its overbought region while the daily MACD Histogram has shaped a bearish divergence signal (a similar occurrence seen on 22 Mar-01 May 2019) which has led to a price decline of -20%. These observations suggest that medium-term upside momentum has started to wane.  

Charts are from eSignal


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.