Apple Inc. Stock Just Cleared a Major Hurdle (AAPL)

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Three weeks ago, yours truly suggested shares of consumer-technology giant Apple Inc. (AAPL) were a buy, mostly for technical reasons, but also for fundamental ones. Apple stock has done pretty well since I made the call, too, advancing almost 9%.

Apple Stock Just Cleared a Major Hurdle (AAPL)It certainly didn’t hurt the bullish argument that AAPL posted yet another impressive quarterly earnings beat in the meantime — the company earned $1.96 per share on revenue of $51.5 billion, versus expectations for net income of $1.88 per share of Apple stock and a top line of $51 billion.

Given the key technical line in the sand hurdled this week, however, the Apple stock chart looks even more bullish now than it did then.

Here’s why.

Weekly Apple Stock Chart Behaves as Cued

As a refresher, the uptrend Apple stock is in right now is the same one that extends all the way back to the low from 2009. Although AAPL has spent some time between then and now well above and well below the mean/regression line over the course of that seven-year stretch, that trend line (red, dashed on the chart below), that line has served as a reliable guideline as well as a pushoff point that whole time.

What we’re seeing now — and the reason I was willing to issue an explicitly bullish call on AAPL in early October — was the budding push-off from that line. The current rally looks an awful lot like the ones we saw unfurl in 2012, as well as in late 2014.


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Apple stock chart - weekly

To be clear, history says Apple stock won’t remain in this overheated uptrend indefinitely. On the flipside, history says this rally could and should last for at least a few more weeks before AAPL gets a little too far away from that long-term trend line.

AAPL Daily Chart Just Flipped the “On” Switch Too

It’s not just the weekly chart of Apple stock that makes for a compelling technical argument — the daily chart is flashing its own bullish signs.

In retrospect, the strength of the breakout move from AAPL that materialized in mid-October is clear. Beginning with a string of higher lows over the course of October, good earnings news flung shares of Apple above a key ceiling around $116.77 (blue, dashed line) on Oct. 23.

The stock peeled back the next couple of days to fill in the gap left behind on Oct. 23, but it didn’t take long for the bulls to figure out there was still a lot more to like about Apple than not like. The $116.77 level was cleared again, and this time the bulls didn’t look back.


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Apple stock chart - daily

In fact, not only have the bulls not looked back, as of Tuesday, they’ve carried Apple stock above the pivotal 200-day moving average line (green) for the first time since late July.

Given the stock’s past behavior following crosses above the 200-day moving average line — or just the fact that AAPL is clearly nowhere near technically being overbought yet — this bullish thrust is a proverbial green light.

Bottom Line for Apple Stock

It may look like AAPL is already overextended, but it isn’t; we’ve seen much bigger rallies from Apple before.

Apple stock shouldn’t hit a key technical headwind until it finds the $133 area again, where it struggled (and ultimately failed to keep rallying) several times earlier this year. All the same, the trip between the current price of $123 and there is an opportunity for an 8% gain, and there’s a decent chance the current thrust could be the one to push AAPL past that ceiling once and for all.

It certainly wouldn’t be beyond the realm of possibility from a fundamental perspective.

Even at a price of $133 per share, Apple stock would still only be priced at a forward-looking (2016) price-to-earnings ratio of 13.5, which is still nothing for a tech stock of this caliber.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/apple-stock-aapl-major-hurdle/.

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