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Can Apple Stock Stabilize the Market After Strong Earnings?

Apple stock is rallying on earnings. Can it snap its losing streak and help turn around the market?

There’s a lot of investors depending on Apple  (AAPL) - Get Apple Inc. Report, which is up about 5.5% on Friday after reporting earnings last night.

Shares are higher on the day, but the Nasdaq, Dow and S&P 500 are all lower so far in the session.

Apple stock has traded lower in each of the previous eight sessions, but the hope is that it will be able to snap that streak today. Not only that, but the hope is that Apple can help bring the markets back to life. 

It can hopefully do so with strong earnings.

The company easily beat on earnings estimates, with profit rising 25% year over year, while revenue of $123.95 billion beat expectations by more than $5 billion.

Gaining back momentum in China helped fuel the strong quarter, as Apple shrugged off supply chain issues. Of course, supply chains are CEO Tim Cook’s specialty.

Now the hope is that the charts are able to repair a bit after the quarter.

Trading Apple Stock

Daily chart of Apple stock.

Daily chart of Apple stock.

Shares gapped up above the 10-day moving average and last week’s low at $162.30.

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The hope is that Apple’s ability to rally can at least stabilize the market, given that it plays a role in each of the three major U.S. indices. Further, its $2.7 trillion market cap is nothing to sneeze at.

On the flip side, I think it spells trouble from a sentiment and technical standpoint if Apple stock rolls over. 

The 10-day has been active resistance for most of this month, so to clear it is definitely a step in the right direction. But to say it’s clear sailing from here would be disingenuous. 

Should shares continue to climb, it will be vital to see how the stock handles the $168 to $170 area.

Not only was $168 former support (and most recently resistance), but in this zone is also the 21-day and 50-day moving averages, as well the 50% retracement of the current range.

For now, this is the area to watch. 

To fail in this zone would not be too surprising, but the key would be to find some level of support (like the $165 area and the 10-day) on the dip.

If it can clear all of the above areas, then $175-plus is on the table and a bid will likely come into the market.

If Apple instead reverses lower and loses the $162.50 area, then the $158 level is in play next — which was support this week — followed by this week’s low at $154.70.