Part 4

We at Dow Experts, are always very excited to see such profit-taking and panic oriented corrections on the market because they give us a chance to buy our favourite stocks at a great discount and therefore be able to maximize our profit potential to the upside in the long term.

Therefore, due to the current coronavirus outbreak and the massive sell-off on the market, we have decided to analyze the performance of the biggest stocks within the two ETFs we are currently buying (XLK & XLY).

Apple Inc. (AAPL)

Apple’s stock has outperformed the market in the past year. The stock was trading at only $144 in January 2019 to reach the $327 highs, which showed a yearly growth of 127%.

Due to the coronavirus outbreak and the negative news, showing that the virus has kept on spreading around the world, Apple has warned investors that it might not reach its 2nd quarter revenue expectations, due to the fact that the virus is expected to hurt iPhone supply and demand in China. Therefore, Apple’s comments on the matter had a further bearish impact on the stock and it was only logical to expect a huge drop to the downside, which actually sent the price from the highs at $327 to the $213 where lots of take-profit interest occurred as well as high purchasing power where investors took the chance of buying the dip and make high profits to the upside. Therefore, there was an immediate bullish reversal on the price, sending the stock to $270 in the past 2 weeks.

By looking at the fundamentals, we should not only look at the coronavirus’ worrisome effects on the market but also the company’s overall financial performance as well in order to identify the next great movement on the market.

Apple has been benefiting hugely from the continued momentum in the Services segment, driven by strong App store sales, as well as the strong success of Apple Music and Apple Pay.

In fact, sales on non-iPhone devices are expected to drive the top line. Furthermore, the Apple Watch Series 5 has seen a great buying interest among customers and is now helping the iPhone maker strengthen its presence in the personal health monitoring space.

By looking at the Apple’s financials we should say that the company has kept on delivering great results and has been growing its revenues and profits, beating analysts’ expectations for more than 5 years now, which has been leading to an immediate bullish effect on the stock price and huge spikes to the upside of around $10-$15 right after the announcement.

The company’s 4th quarter earnings report came out much better than expected as well. Apple delivered $4.99 per share while the analysts had expected $4.54, which represented a 10% bullish surprise, further proving the company’s strong market positioning and great financial success expected to boost investors’ profits for many years to come.
Going back to the technical side of things, the stock faced a huge buying interest among investors at the strong diagonal support line at $220-$230, sending the price towards the $270 highs where it is currently trading. Therefore, the price is still trading at a 17% correction from the highs created back in February before the coronavirus’ spread, giving us a chance to make high profits to the upside in the next few weeks and months.

The technical indicators have already turned bullish and reversing from the oversold territories. The Stochastics indicator had already crossed up in the oversold area, giving further bullish indications, which led to an immediate bullish impact on the chart. Even though the coronavirus is still out there causing negativity on the market and leading to a slowdown in the economy and a potential recession coming, we believe buying Aple for the short to middle term is a great opportunity around the current levels.


Chart: Apple Inc.

Therefore, we will start buying the stock at the first strong support mark at $262-$260 and should the price fall further towards the major support at $240 we will be buying even more aggressively at that point and patiently waiting for a bullish movement towards $275 where we will be collecting some profit. Our second profit-taking target stays at $285-$290 where we will be fully collecting our profits and waiting for another correction to start buying again.

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