Apple Stock (AAPL) Hits Record High With Q2 Earnings On Tap
Wall Street expects Apple (AAPL) to post its best sales and earnings growth in over a year when it reports fiscal second-quarter results after the market close on Tuesday, even though iPhone sales could be slowing ahead of the launch of the company’s 11th-generation smartphone.
Analysts are forecasting Apple to earn $2.02 a share, up 6% year over year, on sales of $52.97 billion, up 5%, in the March quarter. That would be its best earnings growth in five quarters and best sales growth in six quarters.
As Apple Prepares to Report Earnings, It’s Not Just All About the iPhone Anymore
When Apple (AAPL) reports fiscal second-quarter earnings after Tuesday’s market close, one of its smaller segments might get lost in the larger discussion about iPhone and Mac sales, but it’s one that’s shaping up to be equally important for the tech giant.
Apple’s Services segment generates about a sixth of the amount of revenue produced by iPhone sales. But the business may serve as a means for Apple to diversify its revenue away from being solely hardware-driven and toward subscription-based sales. That’s become increasingly important for Apple as it experienced a slowdown in iPhone sales for the better part of 2016, before bouncing back in the most recent quarter.
Earnings Preview: What Might Be Expected When Apple Reports?
Last week ended with a string of results from some of the biggest companies in the tech sector. Positive results continued with earnings beats from Amazon, Alphabet Inc., and Microsoft. Amazon and Google also beat revenue estimates, but Microsoft came up shy of Wall Street’s top-line estimates. Tech earnings continue this week with Apple reporting fiscal Q2 results after market close tomorrow.
Apple is expected to report earnings of $2.01 per share, up from $1.90 in the same period last year, on revenue of $52.61 billion, according to consensus third-party analyst estimates.
Today’s Trading Lesson…
What attracts the attention of retail investors? Higher prices. More specifically, fast-moving higher prices. Said through the lens of technical analysis, higher prices with wide fluctuations after a significant move higher.
The “fluctuations” part is what makes the retail buyer think he has a second chance at a better price.
So we are clear, a “sloppy/whippy” topping pattern (after a mark up/up trend), is when institutions are marketing stock for sale. They are telling you they need to get out, and they are attracting you like moths to a street light with price action.
Institutions Marketing Stocks for Sale: Order Flow in Action
1) The beginning of the mark up is orderly. Not attracting attention yet.
2) Just prior to the first attempt to market stock for sale is completed in a $4 trading range. Price falls quickly during the few days of “A” but there is too much stock for sale. We need higher prices and more “second chances” to get a hot stock at a better price. Think of spot “A” as the movie preview. It gets your interest in things to come.
3) Area is the marketing machine at it’s best. New high prices that violently decline and give you another chance to buy. The wider the swings, the more attempts at a new high, the more lemmings drawn to the buy button before the coming decline.
On the Tape Today | 5-2-17
CAT | Caterpillar showing a topping tail, a swing high and 3 days of well-offered price action. Looking for two different trades today. The first is a $102.50 buy-stop, with a goal of adding to the position on a pause @ $105. ($101 stop loss)The second option is a lower open, and a buy trigger above the first 30 minutes of trading. The second trade can be a little more aggressive with shares on initial entry. (Close below $100 stop loss) The profit target for either position comes in @ $108.75.
IBM | International Business Machines finally breaks down and produces a bearish energy candlestick. A $158 sell-stop to trigger a new short sale. Planning to add to the position $156, with an ultimate target of $150 to cover. Stop loss on a close above $160.
Tape Reading the SPY ETF
$SPY produced a doji candlestick on mediocre volume, which at this point is actually healthy.
Putting the pieces together, a light volume pause gives hope for new all-time highs. With earnings this week from AAPL (today after the close), FB and TSLA, we may finally get the momentum to ignite a new batch of bullish order flow.
The counter to this argument states that only a few powerfully bullish stocks area holding up the market, AMZN and it’s quest to trade over $1,000 leads the list. A look at the heatmap of the S&P 500 shows this clearly. I don’t see signs of distribution and the VIX remains low (very), this means an aggressive bearish argument is hard to make.
If you and I were in my NYC trading office and I was giving my pre-market speech, I would say look long for the current bias, and any short sales should be cash flow trades. The bullish side of the tape becomes a better idea beyond $SPY $240. Facebook has reached a Saturation Point and has earnings this week, classic sell the news play coming up.
* “Distribution” develops during a heavy volume pause after bullish order flow, you can read more about price action stages of order flow here.
** Saturation Points are levels in price action where the odds of continuing the previous momentum move in that direction have decreased dramatically.
Stock Market Today: Heatmap of the S&P 500
Stocks to Trade 5-2-17 | Tuesday Edition
Bullish Momentum: EXAS, TWLO, MOMO, TSLA, AMZN, NFLX
Bearish Momentum: etp, slca, vfc, kss, x
Long-Term Order Flow
Bullish Order Flow: MOMO, TSLA, AMZN, WYNN, ADSK, NFLX, AAPL, FB, SRPT, AET, BABA, BIVV, EW, COST, STT, ACN, UNH, HON, UNP, RH, HD, WDC
Bearish Order Flow: x, slca, fast, tsco, dfs, apc, ibm, lyb, esrx, slb hal, eog
2X Normal Volume: SYF, WDC
Inside Days: intc, qcom, pypl, stx, cog, dal, tgt, pep, low, ma, cof, wba, dhi, xlnx, unp, psx, lly, len, dd, kbh, car, dks
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