After Apple announced its earnings for the second quarter of fiscal 2013, it announced an increase to its stock repurchasing program from $10 billion to $60 billion.
Apple reported record revenue for the quarter, but the quarterly net profit of $9.5 billion ($10.09 per diluted share) was below a year-ago same quarter result of $11.6 billion ($12.30 per diluted share). In addition, the gross margin was 37.5 percent compared to 47.4 percent in the year-ago quarter. Apple’s stock price would have reacted in an adversely negative fashion with these financial results. Instead, the stock price held above the recent low of $385.10 made on April 19, 2013. More importantly, Apple stock price has increased more than 10% since the reporting of second quarter financial results. Its stock price went from $406.13 at the 4/23/13 close to 5/2/13 closing price of $449.92. The reason Apple stock price did not reacted negatively could due to the possible price support from its $60 billion stock repurchase program.
From a technical perspective, the monthly stock price chart show a dragonfly doji candle formed for the month of April. This type of candle typically signify a near term price reversal, and an intermediate low for the stock price.
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Usually, a dragonfly doji candle is accompanied by capitulation selling. But for AAPL, there was no increase in trading volume for the month of April. The absence of increasing volume associated with the dragonfly doji could mislead some of the AAPL bears to remain short while they wait for the capitulation to occur. This misread from those AAPL bears could turn out to be very painful and costly if the April dragonfly doji candle reflects the true price action.
Click here to see possible trading price levels for AAPL.
Disclosure: Long AAPL
