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Apple Stock: Earnings Headaches Aside, Buy the Dip?

Apple stock is falling after the earnings report, but buyers are stepping in where they need to. Here's how to trade it from here.

Apple  (AAPL) - Get Apple Inc. Report shares are trading lower, about 2.75% on the day, but the stock is well off the lows.

The post-earnings fall in Apple and the post-earnings gain in Microsoft  (MSFT) - Get Microsoft Corporation Report allowed the latter to overtake the former in market capitalization, making the Redmond, Wash., software giant the largest company in the stock market.

Apple came up short on expectations as supply-chain woes weighed on its results and management’s outlook.

That was also a problem for Amazon  (AMZN) - Get Amazon.com, Inc. Report, which is also down on Friday after reporting earnings on Thursday evening.

At the end of the day, Apple has crushed expectations over the past year. Yet the stock hasn’t been much rewarded for its results, even though it recently hit new highs last quarter.

At the same time it’s nice to see the market not punishing the stock too badly after the company’s fiscal-fourth-quarter results.

Now, though, investors have to decide if this is a dip they want to buy or if it’s a warning sign about more pain on the way.

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Trading Apple Stock

Daily chart of Apple stock.

Daily chart of Apple stock.

In early September, Apple hit a new all-time high just over $157. From there, it endured a sharp “ABC” correction down to the $138 area, the prior high from September 2020.

The stock was swept up in the overall market correction but found its footing where it needed to. While the stock traded well into earnings, the post-event reaction is less than ideal.

Apple stock took out this week’s low, but so far it’s finding a bid at the 50-day moving average and the 10-week moving average. That bodes well for bulls.

If the shares can stay above these two moving averages, I would argue that bulls remain in control of the stock.

Should Apple lose these measures, the $145 level will be back on watch. If that level is lost, it opens the door back down to the $138 to $140 zone, along with the 200-day moving average.

This would actually be an attractive buy-the-dip spot if Apple pulls back that far.

Over $145 and I remain bullish on Apple. If the stock can finish Friday above $150.18, it will finish above last week’s high.

In any regard, a move over $150 opens the door back to the recent high near $153, then the all-time high near $157.