Apple sellers shout loudest

With Apple due to release its latest earnings, investors are becoming increasingly wary owing to a perceived lack of innovation and a falling share price.

Apple logo
Source: Bloomberg

Apple is due to release its Q4 earnings figures on Tuesday 27 October. Due to the sheer size of the world’s largest listed company, it will not only be Apple investors that will be watching this highly anticipated release.

The Apple outlook has no doubt taken a bit of a dent throughout 2015, as high expectations for the Apple Watch have faded as investors realise perhaps it is not the game changer the iPad and iPhone were for the firm. Add to that the deterioration of Chinese economic growth, coupled with a loss of savings for many Chinese investors, and it is clear why many are expecting very little growth for the firm in comparison to prior periods.

From a financial standpoint, the earnings per share is expected to marginally rise to $1.88 from $1.85, with sales also expected to tick up to $50,966.514 from $49,605.000.

Interestingly, despite the furor around Apple’s development of a new product, in the Watch, it is instead the new iPhone 6S and 6S Plus which will have most impact for the firm. However, there is speculation that orders are relatively subdued historically owing to the lack of innovation and increasing competition. One thing Steve Jobs was good at was innovating, yet many are beginning to believe Apple have run out of truly innovative ideas.

Despite this, analysts remain firmly in favour of Apple shares, with 44 buys, ten holds, and just two sell recommendations.

From a technical standpoint, the bounce from the September low appears to be flailing somewhat, with the recent price action forming a bearish flag which points towards a likely break lower. Given that price is today coming into contact with a descending trend line, alongside the 50-day simple moving average, it seems likely that we will see this current bounce resolve in a bearish move lower.

Should price move back above $117.24, it would point towards a continuation of the September recovery, yet until that happens I am bearish and believe we could see another break lower from the current flag formation. Support levels to watch out for would come in around $107.31, $103.96 and $100.

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