AAPL Shares Testing Range Support After Earnings Selloff

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AAPL Shares Testing Range Support After Earnings Selloff

AAPL Shares Testing Range Support After Earnings Selloff

AAPL shares suffered a sharp selloff after the tech giant released its earnings report this week. Data was actually better than expected, with earnings and revenues coming in strong but it appears that most investors were unimpressed.

Revenue increased 33% and profits increased 38% from last year, to $49.6 billion and $10.7 billion, respectively. To top it off, the company saw a 35% increase in iPhone sales during the period.

AAPL Shares Outlook

Despite this, AAPL shares sold off from the top of its range around $132.50/share and dropped to the support at $122.50/share. Price made a strong bounce off the range support, indicating that there were plenty of buy orders located there.

The 100 SMA came close to crossing below the 200 SMA but remained safely above the long-term moving average after the bounce, suggesting that the path of least resistance is still to the upside and that the uptrend might resume sooner or later. However, stochastic is still moving down so there might be some selling pressure left. RSI is also pointing down, hinting at a potential selloff.

A break below the range support could mean longer-term losses for AAPL shares, which might take it to the next floor around $120/share or even lower to $112.50/share. On the other hand, a bounce could lead to another test of the range resistance at $132.50 or perhaps an upside breakout later on.

Much could hinge on the performance of the company in the current quarter, as analysts will be keeping tabs on how sales of the Apple Watch holds up. A review of their gadget sales over the past years shows that iPhone sales have been the only ones picking up while other gadgets such as the iPad and iPod have seen continuous declines.

In addition, overall sentiment in the financial market is expected to turn sour, as the global economy is faring worse. Weak demand and growth in China could weigh on risk-taking, which is negative for higher-yielding equities and AAPL shares.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.