The Highly Awaited AAPL Pre-Earnings Analysis

Hey, traders the world over. There is one name that likely will reign supreme this week. The fan favorite, the market vixen, the home coming queen, the winner of the iron man: we have AAPL earnings this week.

There will be many reports on the actual earnings numbers. How many iPhones were sold, Apple music subscribers, and many other quantitative metrics? I do expect AAPL to beat most expectations as usual. It’s a company with an obscene amount of cash, with a loyal following and with sensational products.

I am going into this week asking myself “How will traders feel if AAPL gaps on earnings?”

Below is my chart along with my 5 perspectives and my plan for the move.

A Gap Up

  • I think most traders expect AAPL to have amazing numbers
  • If AAPL gaps up, but opens below $106 I am slightly bearish. I will look to get into bear call spreads and the 50 EMA on the daily should provide a good resistance as AAPL likely heads back into $95
  • If AAPL gaps up and opens above $110 I am slightly bullish. I do think the majority of traders who bought down here at $95 will sell for a profit, along with anyone else who bought in the last six months, hoping ‘this’ is their final chance to bail for a small loss. However, the shorts out there might be trapped and forced to buy to cover above $110. The 100/200 SMA will provide resistance. I will be cautious with a gap up here, but the edge should be more bullish than bearish.

A Gap Down

  • It’s a scary notion to think AAPL could gap down. It honestly might. If AAPL gaps down, but opens above $95 I will continue to be patient and likely only buy the long-term supports. $95 is a brick wall support
  • The big kahuna. If AAPL gaps down and opens below $91.77 specifically (The 200 SMA on a weekly chart), AAPL becomes a very damaged chart. It’s breaking waves, supports, fibs, head and shoulders, long-term averages, it’s falling from the tree a bit. Likely into the $70’s maybe even $60’s. It could take a few months to get that low, but I most certainly will not have a short or medium term bullish outlook if this happens.

Personally, I don’t think AAPL gaps very much at all. Maybe 4-5% down and then the rest is going to be determined on the strength of 2016. If the market rolls over, AAPL will follow.

Let’s see what happens, traders from around the planet! The best we can do in this environment is create a trading plan and have the discipline to follow it. Until next time, Love life, Life life and trade it!

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