by Michael Tarsala, CMT
They note that Apple trades for lower multiples than the last time it was at $600 back in April, now a forward PE of 11.1, vs. 11.9 three months earlier.
I agree in spirit. But here's the way I see it:
The $600 mark is not all that important. What is more important, if you ask me, is the long price history of Apple shares trading in roughly the $565 to $580 range.
It is very positive that Apple has rallied above that support zone heading into earnings. It tends to act as a magnet for the price. So breaking free of it is an acheivement.
It is possible, though, that the magnet effect again draws the price back to that long-term price range post-earnings.
So I would be far more comfortable saying that Apple has a good chance of holding around $560 -- just a little below the support.
There's a lot to like about Apple. It is expected to be the largest source of tech earnings growth in Q2, according to FactSet. And it stands a chance this quarter of being the #1 or #2 earnings growth overall for the S&P 500, perhaps only second to Bank of America (BAC). With a very strong earnings report, investors may be drawn to Apple all the more as one of few stocks with strong potential to beat the market's return.
We are talking about a company that has beaten earnings expectations 25 out of the 26 past quarters!
If it does retreat despite a Q2 earnings beat, however, it might not have far to fall. Perhaps back to the strong support line.