Here’s how far Apple stock can rally on earnings
Apple (AAPL) – Get the Apple Inc. turns heads and gives the bulls something to cheer about on Friday. With shares up “only” 3.3% so far on the day, it was a wink that the bulls needed.
Amazon (AMZN) – Get the report from Amazon.com Inc. may get all the attention with its shares up 11% in a post-earnings celebration, but Apple stock is also higher after a better-than-expected quarter.
Investors worried about potential supply chain issues and fears of a recession affecting sales. Turns out that wasn’t a problem.
Apple saw a higher and lower pace and while management didn’t provide guidance for the next quarter, the company said revenue is expected to accelerate year-over-year.
That’s apparently good enough for investors, as Apple shares assemble their fourth consecutive weekly rally and are suddenly 25% higher from the June low.
With positive feedback from FAANG this earnings season – except for Meta (META) – Get the report from Meta Platforms Inc. – the bulls have acquired a key part of the bullish momentum. Now the question is, can it be maintained?
Trading Apple shares after earnings
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Notice how Apple stock has risen over the past month. Shares easily broke through the key $150-$152 zone earlier this month, which was the previous month’s high and the first quarter’s low.
After crossing this zone, Apple stock hit the 50-week moving average, returned to that aforementioned $150-$152 zone, and found support. This was a key development for the bulls, as it would have been easy for Apple to crash and drop.
Instead, it rose before earnings and we are now seeing more follow through as stocks move above the 200-day moving average, the 61.8% retracement and the weekly VWAP measure.
All of this is very impressive price action. Clearing all those metrics doesn’t mean Apple can’t back down, but the benefit of the doubt now rests with the bull case.
If the stock were to lose some of these metrics – like the 200-day and 50-week moving averages, the weekly VWAP metric, and the short-term active support via the 10-week moving average – then the bears can exploit the momentum.
Until that happens, we have to assume buyers are in control. If Apple can clear the $164-$166 zone, it opens the door for the 78.6% retracement near $169.
A move above that will technically bring back into play resistance at $175-$178. Given the current investment environment, it’s hard to imagine right now. However, it is possible if the bulls keep control.
As for support, the bulls would like to see the $158-$160 area hold back.