AAPL earnings have come and gone and after hours the stock had a relatively muted reaction. Yes they opened around $590 but they stayed there for all of 0.02392 seconds before climbing back above $600. So what now?
Well, for starters it is clear that a poor earnings report was getting priced into AAPL on the move lower from $705 to $610. What’s also clear is that just because something was priced in doesn’t mean it has to go back up. AAPL remains in a downtrend. Key psychological support is at $600. If that breaks, traders will begin to think about the possibility of a move to the July low at $570.
How am I going to approach AAPL now? As if earnings never came out. That’s it, they might as well have not been announced given the nonvolatile aftermath. The lack of a significant move in reaction to AAPL’s earnings does two things for me mainly:
1.) It doesn’t change the chart, AAPL is still in a steady downtrend
2.) It doesn’t accelerate the downtrend, as AAPL didn’t suffer a tank job
As a result, my focus will remain on the mid point I discussed going into earnings earlier this week, $612.51. Every time AAPL failed to hold above $620 (this happened Tues, Wed, & Thurs) $612.51 proved to be an accurate target. Therefore, I’m going to stick with what’s working. I will treat failures to break and hold $620 as a shorting opportunity. A break and hold above that and I, as I believe other traders will have to do, will begin to weigh the possibility that AAPL’s downtrend is over.
I would note though that Thursday was AAPL’s second ever daily close below below $612.51. The significance of this is AAPL is starting to show me an easier ability to stay below the mid point of its range from the key May low to its all time high. Said another way, on a “range basis” AAPL is now closer to the low than the high.
Pay close attention to how much volume trades within the first 15 minutes of the day as well. The only time AAPL finished above its daily open this week so far was on Monday. On that day AAPL traded 2.46 million shares within the first 15 minutes as the price was rising. AAPL needs a similar volume pace with the price rising in order to have me expecting upside.
Note that if AAPL trades that volume, but it is as the price is falling (say from a gap higher), I’ll consider that a bearish sign. Why? Because that would imply to me that even though there is good demand, there is just as much supply available. There was a perfect example of this on Thursday when AAPL gapped to $620 from a $615 prior days close only to fall towards $616 three minutes into the open.
Bottom line, I’m treating AAPL like earnings never came out. I’m not going to let its financial results impact my decision making on the chart. Why not? Because the chart doesn’t appear to be letting them do so. Had the stock moved $15-$30 one way, this would not be my opinion, but it didn’t, so it is.
AAPL — $609.54
Bias — BEARISH
Time Frame — Friday (day trading parameters only)
1st Target — $600 ON HOLDS BELOW $612.50
2nd Target — $585-$590 ON INTRADAY BREAK & HOLD BELOW $600
Change of Bias — BREAK AND INTRADAY HOLD ABOVE $612.50
Change of Bias Target — $620
Change of Bias 2nd Target — $630 ON BREAK AND HOLD ABOVE $620
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