Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Apple Stock Breaking Out As G20 Begins: Will It Rise Toward Its 2019 Highs?

By Michael KramerStock MarketsJun 28, 2019 02:51AM ET
www.investing.com/analysis/apple-stock-breaking-out-as-g20-begins-may-rise-towards-its-2019-high-200435501
Apple Stock Breaking Out As G20 Begins: Will It Rise Toward Its 2019 Highs?
By Michael Kramer   |  Jun 28, 2019 02:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This post was written exclusively for Investing.com

Apple’s (AAPL) stock may be about to race back to its 2019 highs of around $215 based on recent option bets and the technical charts—a gain of about 7% from its price of around $200 on June 27. The shares of the iPhone maker have risen by over 27% so far in 2019, but are still 13.5% off their all-time highs last seen in October 2018.

One reason investors may be getting bullish on Apple is the potential for a trade resolution between the U.S. and China. President Trump and President Xi are expected to meet at the G20 summit in Japan to discuss a tentative resolution. Should a truce or pause to the current trade dispute be reached, Apple shares (NASDAQ:AAPL) could surge higher.

Apple price chart
Apple price chart

The Chart Points To Higher Prices

The technical chart for Apple shows that the stock is breaking out, after rising above a level of technical resistance at $198. It creates the potential for the stock to rise to around $212 to $215. At that resistance level, there is a technical gap. That gap was created the day it was announced the U.S. would raise the tariff rate on China imports to 25% from 10%, resulting in Apple’s stock falling sharply. In this case, the gap is bullish, as the stock tries to rise back to resistance.

The relative strength index is also indicating the stock rise. It started trending higher at the beginning of June and is currently at a level of 60. For the equity to be considered overbought, the RSI level would need to rise to 70 or higher.

Apple technical chart
Apple technical chart

Bullish Option Betting

The chart isn’t the only bullish indicator. The options for expiration on July 19 suggest that the stock would rise or fall by 5% from the $200 strike price, based on the long straddle options strategy. This places the shares in a trading range of $190 to $210 by the expiration date. However, the options are implying a bias for the stock to rise. The number of open calls outweigh the number of open puts by a ratio of almost 2 to 1, with 43,000 open call contracts to just 26,000 open put contracts.

Also, the July $210 calls have steadily risen to approximately 29,100 open contracts from roughly 20,800 on May 31. For a buyer of those calls to earn a profit, the stock would need to rise to around $211.30, a gain of over 5%.

Open Positions
Open Positions

(www.investing.com)

Trade Tensions Weigh

Apple has been caught in the crosshairs of the U.S.-China trade war since the start. The company generates a tremendous amount of its revenue from China: through the first six months of fiscal 2019, Apple had revenue of almost $31 billion from the country, representing 21% of its total revenue. Trade tensions may have played a big role in Apple’s weak second-quarter results. Revenue in the country fell by 21.5% to $10.2 billion from $13.0 billion the prior year.

Additionally, Apple manufactures its iPhone units in China. If the U.S. decides to impose tariffs on the final tranche of $300 billion of imports it could result in the price of the iPhone rising in the U.S., or result in Apple’s margins and earnings falling. In either case, it would be bad for the company, and bad for the stock.

Apple has a lot riding on a potential trade resolution at the upcoming G20 summit. If the U.S. and China can work out an agreement, then Apple could be one of the biggest beneficiaries. With such potential benefit on the line, it would seem investors are betting the shares will rise in the days and weeks ahead. Investors better hope they get that positive outcome from the G20 summit.

Disclosure: Michael Kramer and the clients of Mott Capital own shares of AAPL

Disclaimer: Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

Apple Stock Breaking Out As G20 Begins: Will It Rise Toward Its 2019 Highs?
 

Related Articles

Apple Stock Breaking Out As G20 Begins: Will It Rise Toward Its 2019 Highs?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Alex Gaitan
Alex Gaitan Jun 28, 2019 10:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
AAPL To $600 by Tuesday
Zaid Yousef
Zaid Yousef Jun 28, 2019 9:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah writing a whole article about being bullish then going and shorting the stock :))
Dillon Walsh
Walshdil Jun 28, 2019 8:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
woke up a little too early to write this one.
Daniel Muvdi
Daniel Muvdi Jun 28, 2019 8:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
is a about to get smashed, 170 very very soon ..
Bede Lui
Bede Lui Jun 28, 2019 7:47AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Its gonna be 400$ v soon!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email