Apple Crumble

Apple crumble is a British pudding that apparently originated during World War II food rationing as a cheap, nutritious filler, particularly during the autumn season when apples are plentiful.

Apple Inc. is an American multinational technology company, head-quartered in California, which designs, develops, and sells expensive consumer electronics, including the Mac personal computer, the iPad tablet computer and, of course the iPhone smart-phone, which has turned Apple into the world’s most valuable brand.

However, its 13-year run of quarterly revenue growth came to a crashing halt last month when the tech giant reported revenue of $50.6BN, lower by 13% thanks to soft iPhone sales, particularly within the company’s largest market, China, which is slowing down rapidly.

The changed sentiment to the company actually changed well ahead of the most recent financials, as can be seen within the following 4-year chart of Apple’s weekly price history:

 26 May 16 1 .

The beauty of charts and the art of “technical analysis,” show that it was over a year ago, in early May 2015 that Apple’s share price peaked at $133 versus the current $99.6, a 25% fall in value.

As with the observations made on “Tesco, every little helps,” and “Oil price collapse, why the surprise,” our proprietary colour-coded trading signals, together with simple TA tools such as moving averages and momentum indicators, gave ample warning in respect of Apple, before the loss in value and the faltering quarterly results. Kindly note that Apple’s stock price remains within the black dashed trend-channel since that date, a falling trend-channel. I will return to comment on the horizontal purple-line.

Legendary investor, Warren Buffett, has just stepped up to the plate and bought $US1BN of Apple stock, itself a surprise being as WB is on record as saying that he avoids tech stocks as he doesn’t understand them. Perhaps he is tempted by the rumours of more stock buy-backs from Apple’s enormous cash pile, not that it’s a particularly efficient use of company cash.

Before you are also tempted to follow WB’s lead, it is worth a closer look at Apple’s more recent price history:

26 May 16 2 .

By zooming in to show Apple’s daily price over the past year or so, one can observe the following:

  • The colour-coded Sell, Neutral and Buy signal panels have caught the twist and turns of the price pretty well for active traders.
  • Price remains below both moving averages, with the 50-day below the 200-day, a very bearish situation
  • Whilst the big red-arrow highlights WB’s recent $US1BN buy, note the “gap” highlighted by the blue-circle. Stock prices have a habit of “filling the gap” before resuming the trend leading to the gap, in this case lower.

So, all in all, the chart of Apple remains bearish, albeit that it has moved from a sell to neutral via our colour-coded signal panels. Furthermore, the significance of that horizontal purple-line shown within the first chart is that it’s a “support-shelf,” tested on three occasions so far by the share-price, after which it bounced higher. IF this support-shelf gives way at $US92, and we expect that it will, then Apple’s share- price will “crumble” rapidly towards the $US60 area, some 40% lower from here.

 

 

 

 

 

 

 

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