Apple's Stock Soars Toward All-Time Highs Ahead Of Q4 Earnings: What's Next?

Apple, Inc AAPL was running almost 3% higher on Thursday, ahead of the company’s fiscal fourth-quarter earnings print. Analysts estimate the iPhone maker will report earnings per share of $1.11 on revenues of $81.03 billion.

A stock’s reaction to earnings is not always predictable and holding stock or options over the event can be risky. During the trading day prior to Apple printing its third-quarter results on July 27, the stock sold off 1.64% and failed to erase the losses until Aug. 13, despite reporting a massive beat.

See Also: Options Trading Ahead Of Apple's Q4 Print

The Apple Chart: Apple broke up bullishly from a falling wedge on Oct. 6 and reversed course into an uptrend, making consistently higher highs and higher lows on the daily chart. Between the date and Oct. 19, Apple’s stock rose  7% higher before entering into a sideways trading pattern for the subsequent six trading days.

On Thursday, the stock broke up bullishly from the sideways range and broke through a heavy area of resistance at $150. The stock then soared up through a second resistance area at $152.40 before beginning to consolidate on lower timeframes.

Consolidation is needed because Apple’s relative strength index (RSI) was measuring in at about 67%. When a stock’s RSI nears or exceeds the 70% level it becomes overbought, which can be a sell signal for technical traders.

If Apple closes the trading session near the high-of-day it will print a bullish kicker candlestick pattern, which indicates higher prices may come on Friday. The reaction to Apple’s earnings will come into play, however, which makes the pattern less predictable.

Apple is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bullish indicators. The stock is also trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.

• Bulls want to see a bullish reaction to earnings and for big bullish volume to come in and push Apple back up toward its Sept. 7 all-time high of $157.26. Above the level, there is no further resistance in the form of price history, but if Apple breaks up into blue skies traders will want to watch for follow-through on the move.
• Bears want to see a bearish reaction to Apple’s earnings and for big bearish volume to drop Apple back down below $148.49, which would negate the uptrend. Apple has support below at $150 and $147.79.