Can Apple Climb Higher?

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With shares of Apple (NASDAQ:AAPL) trading around $528, is AAPL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Apple designs, manufactures, and markets mobile communication and media devices, personal computers, portable digital music players, and a variety of related software, services, peripherals, networking solutions, third-party digital content, and applications. The company’s products and services feature the iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and further accessory, service, and support offerings. Apple also delivers digital content and applications through its iTunes, App, iBook, and Mac App stores.

Nothing’s certain in the realm of rumors, but Apple Insider highlighted a report published Tuesday in China’s Economic Daily News that claims the supply chain has been finalized for Apple to manufacture its heavily rumored smartwatch. The report includes a good number of details about the as-yet-unannounced device, including that the company is planning for a release date in the third quarter of this year. The report says the “iWatch” — as it might be called — will contain high-tech sensors to detect a wearer’s heart rate and blood pressure, among other metrics.

T = Technicals on the Stock Chart Are Mixed

Apple stock has struggled to make significant progress over the last several quarters. The stock is currently trading sideways and may need time to consolidate before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Apple is trading between its rising key averages, which signals neutral price action in the near-term.

AAPL

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Apple options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Apple options

25.98%

90%

88%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

May Options

Average

Average

June Options

Average

Average

As of Wednesday, there is average demand from call an put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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