Charting Apple vs the Rest

<p>On March 16 of last year, Apple’s successful release of its iPad 3 dominated the markets as the firm powered further as the world’s most valuable […]</p>

On March 16 of last year, Apple’s successful release of its iPad 3 dominated the markets as the firm powered further as the world’s most valuable company.

In March 14 of this year, Apple sits on the sideline, watching Samsung release its successful Galaxy S4.

Apple’s share is down 39% from its September high, posting six consecutive monthly declines. Its fundamental woes began surfacing amid worries of insufficient supply of iPhone 5 and iPad, overlapping with reports of slowing demand.

This week’s rumours of cuts in orders have also weighed on the price. But the main fundamental challenge remains competition. While Apple lacks new products, Samsung continues to overcome criticism of lacking innovation by halving the product cycle of its Galaxy S series to 12 months.

Product releases aside, Apple will now have to resort to impacting the stock price via paying their shareholders. Last year’s announcement to return $45 billion in cash over three years may no longer be enough. It may have to give an additional $45bn in the form of dividends and stock buy-backs. The next boost to Apple’s stock price may by combining cash distribution with snappy upgrades to its iPhone and/or iPad mini.

Apple has clearly broken below its four-year trendline. A rally back to 450-460s may seem inevitable, but the key remains whether we’ll see a rebound above the 100-week moving average near 470s. As it stands the weekly and monthly stochastic suggest prolonged consolidation between $400 and $450, before a renewed wave of selling tests the $350 territory. A break above $475 is not expected anytime soon.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.