Since late April, Apple’s stock has up 10% while the NASDAQ has remained relatively flat. Through the NinjaTrader platform and SwamiCharts I’ve been able to technically analyze this movement from a contextual big-picture perspective.
As you can clearly see, in late June the SwamiPredict indicator suggested a possible upward price movement. This is illustrated by the emerging green coloration. Also, the MarketMode indicator detected a cyclical trading period (shown with the yellow coloration) that started around the 1st of March and lasted until early July.
From a fundamental perspective here are three specific areas that I believe would substantially benefit Apple’s business and stock.
Super-growth in China. Through the first half of this fiscal year, Apple’s China revenues amounted to 10% of their overall revenues or $5 billion. That was up 400% from Apple’s Chinese revenues in the prior year. The question is how big could China grow to be out of Apple’s total revenues? We don’t know but the opportunities there appear to be still very large. There are only 4 stores in China, so news about new shop openings will be positive for Apple’s stock. Some kind of news about an iPhone tailored to a new LTE 4G network in China could also be a big deal. So could a low-cost version of the iPhone designed to work optimally in the pre-pay market.
Cheap iPhone for the low-tier of the market. iPhones now account for 50% of Apple’s revenues according to last week’s earnings. Amazingly, the average selling price of an iPhone increased in the quarter to $660 from $622 a year ago. iPhone sales in China increased by almost 250% in the quarter. As such, I believe that if Apple was able to come out with a low-cost iPhone – maybe specifically catering to the prepaid market to make it have mass appeal in China – it could move the needle even more significantly for future iPhone sales. Recently, Cook confirmed on the recent earnings call that they know they have to play in the pre-pay market to drive the kinds of volumes they want. Expect a tailored pre-pay offering – and likely a dedicated iPhone – for this purpose in the Fall.
New products. iPad’s product announcement was a great entry to the stock a year ago. No one really knew that it would take off until it started selling. Apple doesn’t come out with big product announcements like that all the time, but even the perceived small new announcements could be significant. This year, it could be Apple TV that moves the needle. It all depends on how comprehensive it is, the extent of the iTunes offering on video right away, and whether they can license AirPlay to many other manufacturers. But, all the signs suggest it could be a Netflix killer.