Traders Look Past COVID Risks
Apple is starting the week on a positive note. The US tech stock is trading in the green ahead of the US open on Monday.
The broader risk environment remains supportive for the time being. This comes despite a fresh uptick recently in concerns over a possible second wave of the COVID-19.
Over 40 US states have been reporting a surge in new infections over recent weeks. This has led to fears that the virus is seeing another spike following the easing of lockdown measures.
However, for now, it seems that traders are taking some comfort in the fact that the death toll is actually falling, despite rising infection numbers.
Apple Stock Bounces Back Following Store Closures
Apple recently announced that it was closing stores across four US states in response to the fresh increase in infections. The move comes in a bid to protect the health of both its employees and customers.
While the news was initially met with some uncertainty leading to some selling in Apple’s shares, the broader rally in risk markets over the last few weeks has helped restore investor confidence.
Apple has now enjoyed a more than 9% rally since the mid-June lows following the announcement.
US Data in Focus
This week, traders will be keeping an eye on US data.
Equities have been well supported over recent weeks in response to outperformance in US labor indicators. The NFPs have rebounded firmly over the last two months, with two consecutive record-beating results.
Retail sales were also firmly higher in May. Traders will now be keen to see whether the pickup in activity continued over June.
Should Thursday’s release highlight continued strength, this should feed into higher equities prices, keeping Apple’s stock price supported in the short term.
Ahead of that release, traders will be watching US CPI on Tuesday to see if the post-lockdown pickup in activity has started to create upward price pressure.
Apple Earnings Due July 30th
US earnings season gets underway this week. Apple is due to report on Thursday, July 30th.
Projections have been trending higher, reflecting a bullish shift among analysts. Current expectations are for Apple to post a bottom line of $2 per share on $51.5 billion of sales. The tech giant beat estimates in Q2 posting earnings of $2.55 per share on $58.3 billion of sales and given the current strength of the rally, it seems that the risks are certainly skewed to the upside ahead of the release later this month.
Apple Bull Channel Continues, But RSI Divergence Showing
Apple closed on Friday at 383.68 and is currently trading up 1.2% at 388.28 pre-market on Monday. The company continues to trade higher within the bullish trend which has framed the recovery rally off the year’s lows.
Price is now trading firmly above the 372.28 level. While above here, focus is on a further grind higher. However, the RSI indicator is showing bearish divergence here.
Traders should be alert to reversal risks on any break of the channel low and the 372.28 level which would then bring deeper support at 352.79 into focus.