Year to date, Apple has gained all of 1% and change, making it the worst performer of the FAANG stocks -- the group of stocks made up of Facebook (FB) - Get Report , Apple, Amazon (AMZN) - Get Report , Netflix (NFLX) - Get Report , and Google's parent company Alphabet (GOOG) - Get Report (GOOGL) - Get Report . Apple isn't trailing by a little, either: The average FAANG is up almost 20% in the first few weeks of 2018.
But Apple could be about to make up for lost time here. The firm's first-quarter earnings call for 2018 is on deck next week, and it could be the catalyst shares need to play catch-up with the rest of Apple's peer group.
On average, analysts are looking for a profit of $3.81 per share for the quarter. That's a big number -- it beats last year's record Q1 numbers by almost 50 cents per share. But Apple has a winning streak of beating analysts' estimates under its belt.
It's done so for 19 out of the last 20 quarters, in fact.
The stakes are higher now, and not just because Apple has been lagging the other FAANGs. It's also a big quarter because Apple is actually teetering on the edge of breakout territory again.
To figure out how to trade it, we're turning to the chart for a technical look:
Two things are pretty clear, looking at Apple's chart.
First, shares have been in a very well-defined uptrend for the last year, bouncing higher on every test of trendline support along the way. That consistent glut of buying pressure on the other side of support provides a technical backstop for Apple's price action.
Meanwhile, there's resistance up at the $177.50 level. That price has posed a challenge for Apple's upside momentum since the beginning of November. So, Apple will need to overcome somewhat of a selling barrier at that price level.
Things get interesting here because trendline support is close to converging with the $177.50 resistance level for shares of AAPL. Simply put, this trade is going to resolve one way or the other: Either with a big breakout through $177.50, or with a violation of the uptrend that's propelled Apple's price tag higher for more than a year now.
And earnings could be the catalyst that tips this stock's momentum in one direction vs. the other.
For now, advantage goes to the buyers. Apple's long-term uptrend is being tested here, and a bounce higher in the next session would be a clear-cut indicator that buyers remain in control of shares at lower levels. A bounce off of support is a good opportunity to build a starter position in AAPL, with a plan to scale into a full-sized position if buyers can muster the strength to push through $177.50 before (or after) earnings.
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This article is commentary by an independent contributor. At the time of publication, the author was long AAPL.