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 Monday 25 April 2016

PM Bulletin: Apple

 

 

Apple (AAPL) is due to deliver its latest results after the US close tonight. It’s fair to say that the stock has lost some of its lustre of late, even if the company’s products continue to be fetishized by consumers in the richer parts of the world.

If we look at the daily chart we can see the sell-off that has taken place since last summer. Between July 2015 and January this year Apple fell around 30%. Excluding the China-catalysed sell-off in August, this is the biggest decline in the stock price since the 45% pull-back between September 2012 and April 2013. Back then some analysts were saying that the best days were behind the company (Steve Jobs had died a year previously, and the stock had had a strong run-up ahead of the iPhone 5 release). But overall, most were still bullish, and their faith was ultimately rewarded.
  




     

We can see that Apple retraced 50% of the most recent sell-off before turning lower once again. Although I’ve drawn a downward-sloping pitchfork on this chart, if you look at a chart going back to 2009 you’ll see that Apple remains in an uptrend. But perhaps it’s that date which is instructive. After all, there are plenty of individual equities and stock indices which have been in an uptrend since 2009. Also, remember all the talk about the FANG (Facebook, Apple, Netflix and Google) stocks? These were the big tech companies which acted as a proxy for the wider market. These were the stocks owned by everyone, and traded extensively by pension funds, hedge funds, high frequency algo traders and investment banks. The trouble with these stocks is that they are often victims of their own success. Many managers are forced to sell them once they become worth more than a certain percentage of their overall portfolio. So, after a long run-up, Apple can get sold off for no apparent reason.

Of course, Apple has a long history of getting stick for its new products. Currently it’s the Watch which is the target of much abuse. But it wasn’t so long ago that its iPads and iPhones were being knocked. In fact, the original iPod probably got some of Apple’s best press but who uses one now?

Anyway, the stock continues to underperform the broader market despite the fact that last quarter’s earnings and revenues helped propel Apple off its lows for this year. We only have to wait a few more hours to see if the latest results and forward guidance will be well received or not.



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Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

 

Posted by David Morrison

Tagged: Bulletin PM

Category: PM Bulletin


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