How to Trade Apple Inc. (AAPL) Stock AFTER Earnings

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It’s a major earnings week for large-cap tech stocks that week, and that’s going to include a big report from Apple Inc. (NASDAQ:AAPL) — and likely a big move in AAPL stock — on Tuesday.

beatthebellAlphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) are among the big tech stocks on the quarterly financial docket this week, and the host of them should really move markets. But AAPL stock in specific is expected to move about 4.50% in either direction following its earnings report, which is scheduled for Tuesday after the close of trading.

Large-cap tech stocks — the top 10 of which make up a meaningful proportion of the S&P 500 Index — have helped to keep the benchmark afloat over the past few months. While underneath the surface, plenty of sectors made lower highs versus their 2015 highs, the technology sector continues to push higher.

In other words, should AAPL and some of the other large-cap tech stocks disappoint on outlook this week, or should investors otherwise decide to react negatively, the broader market could become much more volatile.

As a reminder, the month of October, historically speaking, tends to bring about at least one volatility surprise (volatility spike). Thus far, October has been eerily quiet leading up the elections.

But we have one more trading week left for the month.

AAPL Stock Charts

For some perspective, let’s look at Apple’s stock charts.

Note in the first chart that AAPL stock at its 2016 lows in May still held its multiyear support line. This support line also coincides with the red 200-week simple moving average. The rally has since pushed Apple shares out of the downtrend that had been in place since early 2015 when the stock began to stall.

From this angle, Apple stock remains on a bull train.

The question I have: Does AAPL still need a pause or a reset before it can push even higher into year’s end? Tuesday’s earnings report should be a good toggle point for the stock, at least in the near-term.

Apple (AAPL) stock chart weekly view
Click to Enlarge

As of Friday’s close, the options market was pricing in a roughly 4.5% directional move (either way) for AAPL stock following its earnings report. Looking at the daily chart, this would mean an upside rally toward around $122, and a downside move toward about $111.50, which also coincides with the yellow 50-day moving average.

Also, on the upside, note the still-unfilled down-gap from July 2015. This could be a target in the case of a severe post-earnings rally. The gap fills around $130 to $131.

Apple (AAPL) stock charts daily view
Click to Enlarge

I’m not an advocate of trying to gamble through earnings announcements. Instead, I would much rather look to buy Apple shares after a dip, if we get one.

First better support for AAPL stock is around $111.50, followed by $105. Upon confirmed bullish reversals, these support areas (if the stock decides to test them) could offer better risk-reward entry points for long-side trades.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/apple-inc-aapl-stock-q4-earnings-iplace/.

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