Apple Inc stock (NASDAQ: AAPL) took a dive yesterday after their earnings release, despite delivering one of the best June quarters ever reported. Only its iPhone sales alone delivered a $40bln USD in revenue. There was also an increase in company’s services revenue, which grew by 33%. Overall, on paper, Apple Inc showed great performance, but the manufacturer’s CFO came out with a warning, that future revenues could be affected by the ongoing semiconductor chip shortage and by unfavorable foreign exchange fluctuations. Investors did not like that tone and started dumping their stocks. That said, this might only be a temporary occurrence, especially if investors reassess the situation and see the firm’s future potential through the current issues.
From the technical side, it seems that after the recent failure swing top, AAPL could be on its way of forming a double top as well. However, for us to consider the current formation as a double top, we would need to see a break of the so-called “neckline” first, which is at 141.68. At the same time, the share price continues to trade above a short-term tentative upside support line taken from the low of June 10th, which means that there is still a decent chance for a rebound. This is why we will take a somewhat positive approach for now.
If the stock moves a bit lower, but finds support near the aforementioned upside line, new buyers might join in and drive the share price higher again. If so, AAPL could climb back to the current all-time high, at 150.00, which may provide a temporary hold-up. That said, if the buying interest remains strong, the stock might overcome that obstacle, placing itself into uncharted territory. One of the next possible targets could be the 155.00 level.
The RSI and the MACD are both pointing slightly to the downside. However, the RSI continues to sit above 50, this way still showing positive price momentum. The MACD is also indicating positive price momentum, as it remains above zero, but sits slightly below its trigger line. The current position of our oscillators seems to support the scenario discussed above.
Alternatively, if the stock breaks the previously mentioned upside line and then falls below the 141.68 hurdle, marked by the low of July 19th, that might spook new buyers from the arena for a while. This move may confirm the idea of a potential double top pattern, as the “neckline” would be broken. AAPL could fall to the 137.75 obstacle, or to the 135.77 hurdle, marked by the current lowest point of July. A temporary hold-up may occur, but if there are still no new buyers in sight, the slide might continue, potentially aiming for the 132.81 level. That level marks the low of June 25th.
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