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Buy Apple on Its Earnings Dip? Let’s Look at the Charts

Apple is dipping despite the company reporting strong earnings. Let's look at the charts to see if this is a buying opportunity.

Apple  (AAPL) - Get Apple Inc. Report turned in a quarter for the ages, delivering an earnings and revenue beat for its fiscal first quarter.

However, it wasn’t just a top- and bottom-line beat. At least, not in mind. The company delivered a monstrous result - and the stock is down about 2%.

Earnings of $1.68 a share beat analysts’ expectations of $1.41 a share, while revenue grew 21% year over year to $111.44 billion. The sales beat expectations by more than $8 billion.

But it might be even more stunning that Apple’s earnings and revenue results both topped the highest estimate among the analyst community.

This wasn’t just a beat - it was a blowout. So why is the stock down?

Some argue that it’s a sell-the-news event, with Apple stock rallying in six out of seven days coming into the print.

That’s fine, but I view that observation a little differently. First, two of those “winning days” saw gains of just 0.5% and 0.2%, respectively.

Second, while Apple rallied 11.9% in those seven days ahead of earnings, the stock is flat from its September high almost five months ago. So although it’s up nicely over the last few days, it really hasn’t done anything but consolidate for several months now.

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Trading Apple

Daily chart of Apple stock.

Daily chart of Apple stock.

I really like where Apple is right now. Granted, it’s coming off a run to new all-time highs and the Nasdaq has been wavering.

Those observations do create risk. However, Thursday’s dip is down into an attractive level.

Apple stock is pulling back to the 10-day moving average. For healthy stocks, this measure tends to act as support. More importantly though, it’s back down into the $138 area.

This level was the high from early September and was again resistance in December. After breaking out over this mark earlier this week, it would be incredibly bullish to see it act as support going forward.

If it does, look for Apple to rotate back up toward its highs near $145. Should it make new highs, the $150 to $151 area is on the table, followed by the 161.8% extension near $160.

If the $138 area isn’t support, look for a possible break down to the $124.50 to $127.50 area. That’s where the 50-day moving average and 61.8% retracement come into play, as well as recent support.

Below will put the 100-day moving average on the table.