Q4 is a historically strong quarter and 2015 is not an exception so far. Supported by dovish central banks in Europe and China, and a series of robust quarterly earnings have helped equity markets to rally a fourth consecutive week.
The Technology sector was particularly impressive with major beats in both earnings and sales, from online retailers like AmazonAmazon and Alibaba Alibaba , software maker Microsoft Microsoft , chipmaker Intel Intel , to online ad giant Alphabet Alphabet .
Last night Apple continued on this positive stream with EPS at $1.96 vs $1.878 expected and revenue of 51.5B vs the consensus at 51.04. This is taking the Nasdaq 100 up over 9% year to date, and just 3% shy from the all-time record reached during the dotcom bubble in 2000.
The Cupertino firm impressed once more with double digit growth in sales and earnings, yet the stock only rose slightly in aftermarket trading. Investors fear the overdependence on the iphone, and difficult comparison for the holiday season. Indeed the very successful iphone 6 and 6 plus which were released in the end of September 2014, will be a hard one to beat.
Having said that, Apple defied a broader slowdown in the smartphone market with an irresistible ease, margins continued to expand and China is growing exponentially despite an overall slowdown. In the current environment of slower global growth, its wisest to stick with the megacaps that enjoy pricing power and resilient demand; Apple just proved its clearly one of them.
The stock remains 13% below its April top and is attractively valued at 11.79x fwd earnings versus the 5 year average at 13.12x. The next hurdle will be the $120 level, and a break above would open the way to the highs around $134. Below, supports can be seen at 110 and 105.