Can Apple Move Higher?

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With shares of Apple (NASDAQ:AAPL) trading around $549, 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 include 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.

Fans of Apple’s high-end desktop computers have been waiting for the new Mac Pro ever since it was first unveiled at the Worldwide Developers Conference in June. Earlier this week, Apple announced that the new Mac Pro would become available on December 19. However, it now appears that most Apple customers won’t be able to get their hands on the latest model until sometime next year. According to Apple’s Mac Pro purchase page, the shipping estimate times for all configurations of the new workstation have been pushed to February. As reported by Cult of Mac, a few initial Mac Pro orders had an estimated shipping time of December 30. “Demand for the all new Mac Pro is great and it will take time before supply catches up with demand,” an Apple spokesman recently told Forbes.

T = Technicals on the Stock Chart Are Strong

Apple stock has struggled to make significant progress in the last several quarters. The stock is currently pulling back 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 above its rising key averages, which signals neutral to bullish 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

27.48%

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

January Options

Flat

Average

February Options

Flat

Average

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