The $500 level in AAPL is massive support. This area has been tested two times before and considering yesterday’s range (the prices AAPL traded at during the day) was low, maybe AAPL put in a short-term bottom. The average true range in AAPL over a 14-day period is $13.05; we were below this yesterday. Yesterday’s candle was also a doji; this may indicate that the sellers were unable to extend prices lower and confirm a short-term bottom thesis.
This action also puts us at an interesting risk/reward level. AAPL may rally about 6% to come back up to the hypotenuse of the triangle and test the 50-day moving average and the risk being a few bucks under $500. However with quarterly results coming up soon, all technical indicators may become irrelevant, as fundamentals will trump trading action.
The analyst community is currently estimating that shares will hit $734. EPS for the quarterly release in about 7 trading days is at about $13.50 and for the current year around $49.00. The median PE for next fiscal year is 10.5 and next year’s estimates are about $57.00.
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