An important week for big tech companies in the United States started. Q2 2020 earnings release coincides with the House hearing on monopoly charges. Apple share price reached $400 two weeks ago – can it move higher still?
Apple Q2 2020 Earnings Preview
The market expects $52.24 billion and $2.06 earnings per share. Any upside surprise creates further pressure against the $400 level and beyond.
However, some investors already signal some potential concerns. First, the House hearing on Wednesday may create a general negative sentiment towards the big tech companies. If the market views the hearings as unconvincing, a nasty selloff may start.
Second, JP Morgan forecasts slightly lower results than the market expectations – only $49 billion in revenue and $1.92 EPS. However, the same company raises the price target for long-term investors to $425, on the back of positive earnings trajectory.
Last but not least, valuation metrics, if they still matter, are sky-high. For example, Apple trades at over 500% difference to the sector on a price/book value.
Anyway, the risk heading into the earnings comes from the House hearings tomorrow. A market selloff will not reverse easily even if Apple earnings beat expectations.
Apple Share Price Technical Analysis
Just like other tech companies, Apple share price met dynamic resistance. On its trip to $400, it met the rising trendline that acted as dynamic resistance for the entire 2020 so far.
Bullish traders may want to see a clear break above $400, coupled with a close above the rising trendline. If not, bears will fight for pulling the price down to pre-crisis levels. In that case, a bearish trading setup needs another attempt at the $400 highs.
If Apple earnings beat forecast and the price jumps above $400, bears can fade the move with a stop loss at the closing of the trading day – if the price is above $400, close the trade, if not, go for the pre-crisis level of $320.
As always, when shorting tech companies in a bull market, the risk of being squeezed on nothing at all is elevated. Therefore, traders must adjust their position accordingly.
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Apple Share Price Forecast
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