Apple Inc. (AAPL) doesn't expect to meet its March-quarter revenue guidance due to the coronavirus outbreak. The company noted both its supply from China and the demand within the country has been affected. Outside of China demand has been strong so far this quarter, and in line with expectations. The stock is lower in early Tuesday trading.
Let's check what this might mean to the charts.
In the daily bar chart of AAPL, below, we can see that prices have stalled a bit in the past two months. The chart does not show Tuesday's early weakness. Prices have nearly doubled in the past 12 months so some profit-taking should not be a big surprise to experienced traders and investors.
AAPL is above the rising 50-day moving average line, which has not been tested since August. The slower-to-react 200-day moving has a positive slope but is well below the market.
The daily On-Balance-Volume (OBV) line has been in an uptrend since June but has stalled in the past few weeks suggesting a balance between buyers and sellers. The 12-day price momentum study shows a slowing of the price gains from January into February. This is not a lengthy divergence but it is a heads up that things are changing.
In this weekly bar chart of AAPL, below, we can see that prices have more than doubled from the late 2018 nadir. Prices are well above the rising 40-week moving average line. The weekly OBV line is very positive but the MACD oscillator has begun to narrow toward a possible take profits sell signal.
In this undated daily Point and Figure chart of AAPL, below, we can see that the software had already projected a possible downside price target in the $279 area.
Bottom-line strategy: I believe the current common thinking about the coronavirus is that it will only have a temporary impact on company revenues. We do not know what will happen but that is the current hope and expectation, in my opinion. Does that mean that a decline in AAPL will be temporary? Probably, but let's go real slow on any new purchases for now.
