After opening with a large negative gap on the 3rd of January, Apple (NASDAQ:AAPL) rebounded, but since the 9th of the month, the stock has been trading in a sideways manner, staying between the psychological zone of 150.00 and the 158.00 resistance hurdle. Today, after the US closing bell, the tech giant announces its quarterly earnings and future guidance, which may prove determinant for the stock’s forthcoming direction. Expectations suggest earnings per share of USD 4.17 on USD 84.03bn revenue. That said, bearing in mind that these expectations are based on the company’s warning of lower-than-anticipated revenue due to the weak performance of the Chinese economy, we see little room for surprises from these numbers.
We believe that the focus will fall on Apple’s guidance for the upcoming March quarter, and with revenue expectations for that quarter at around USD 60bn, Apple has to deliver a better-than-feared outlook for the stock to stage another leg higher. If so, the price could emerge above the key obstacle of 158.00, a move that would confirm a forthcoming higher high and may signal a short-term reversal to the upside. Such a break may pave the way towards the 167.00 territory, which provided decent resistance on the 18th and 19th of December. Another break higher, above 167.00, could encourage investors to put the 172.00 zone on their radars. That hurdle prevented the price from moving north on the 12th and 13th of December.
Looking at our short-term oscillators, we see that the RSI turned up from slightly above its 50 line, while the MACD lies fractionally above both its zero and trigger lines. Although both indicators detect somewhat positive momentum, the fact that they lie near their equilibrium barriers enhances our choice to wait for a move above 158.00 before we get confident on the stock’s upside potential.
Now in case the company appears more concerned than expected, the stock could slide. A break below the psychological zone of 150.00 may raise concerns that the downtrend started in early October is not over yet, and could pave the way for the 142.00 zone, near the low of the 3rd of January, or even the round figure of 140.00, marginally below the low of the 11th of April 2017, which was at 140.04. The last time Apple traded at 140.00 was on the 27th of March 2017.
