Apple Inc. (AAPL): Approaching A Reversal Pattern?

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Apple Inc. (NASDAQ:AAPL)’s stock has trended downward almost all year so far, and now one analyst says it looks like we’re about to see it do an about-face.

Apple Inc. (AAPL): Approaching A Reversal Pattern?

The Wall Street Journal’s Tomi Kilgore interviewed Chase Investment Counsel CIO Edward Painvin, who believes the recent trend surrounding Apple shares means we’re about to see a quick reversal. He noted that shares of Apple Inc. (NASDAQ:AAPL) have closed under their 50-day moving average for the last three sessions and seven times since the middle of May.

Apple Bottoming Out, Building Head And Shoulders Pattern

However, in all this time, the stock has only fallen .2 percent, according to Painvin. He says this suggests that the stock might be bottoming out and constructing a sort of base from which it can launch its next rally. He also said that by looking at Apple’s chart, it looks like the company’s stock is going to do the “inverted head and shoulders” pattern, which is a classic bullish stock move.

He says the $385.10 per share price on April 19 was the company’s low, and it’s the top part of the upside-down head. He said there are two left shoulders, which one being the $435 per share low in January and the other being the $419 per share low in March. Then in May, the $418.90 per share is the first right shoulder, and Apple Inc. (NASDAQ:AAPL) is in the process of building the second right shoulder.

According to Painvin, in order to complete the head and shoulders pattern, the stock would have to go above the $465.75 per share high in March. He said if the stock does get there, his price target on it would then be about $530 per share. He also said though, that he doesn’t feel like there’s any sense of urgency, either to sell or buy, regarding shares of Apple Inc. (NASDAQ:AAPL).

Apple’s iPhone Momentum May Be Improving

In addition to the bullish case some analysts are building based on the company’s stock chart, there’s also another sign that the company might be gaining momentum. Morgan Stanley analyst Katy Huberty issued a brief report to investors focusing on their AlphaWise Smartphone Tracker.

According to their checks, iPhone demand for the second calendar quarter of the year indicates it could track up to 31.3 million units at the end of May. That’s ahead of the consensus at 26.5 million and even better than April’s number, which was 30.5 million. Huberty notes that Apple Inc. (NASDAQ:AAPL)’s discounting of the iPhone 4 may be adding significant upside. She looks for the company to report revenue at the high end of its guidance for the second quarter, which was $33.5 billion to $35.5 billion.

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