Another year and more updates coming out of Apple means that the share price is bound to show some volatility.
With the announcement of four new iPhone models, including the thinner iPhone Air, with additions to their AirPod and Watch series, surely, we should see a boost to Apple’s stock, right?
Well, not necessarily.
Buy the Rumour, Sell the News
As traders, we’ve all heard the phrase. This strategy involves driving the price higher in anticipation of positive news, and then selling once the news release has been made, allowing traders to lock in profits.
Even if the event is a game-changer, which is guaranteed to make profits for a company, the stock usually falls due to traders exiting their positions.
Apple’s behaviour around previous reports is usually fitting for the above explanation. Ahead of most events, when new products are unveiled, the stock often rises gradually, as investors anticipate strong sales along with the market buzz created by the media.
However, on the day of release, surprisingly, the stock often drops or remains flat. This is because a lot of optimism is already priced into the market, so the actual reveal doesn’t always meet the desired expectations.
Does the stock eventually pick up?
Good question. The stock price itself usually depends heavily on early sales figures and preorder demand.
Historically, iPhones and other featured products drive revenue. Therefore, if a new model performs well, it will be reflected in the stock price, as the valuation tends to increase.
Since this announcement looks towards innovation rather than repetition, the long-term picture looks upbeat for Apple’s share price.
Can this announcement affect other assets?
As Apple is such a big player in the tech market, traders need to look at the whole picture so that no opportunity is missed.
Indices are an important part of this, since Apple makes up a large share of the big indexes in America. The Dow, S&P and the Nasdaq have all recently hit record peaks due to AI companies exceeding expectations.
With Apple showing no signs of slowing down in the AI and Tech field, indices in the US are expected to maintain their bullish stance.
Bottom Line
Even though the stock price has been flat on previous launch days, it doesn’t tend to stay that way, with Apple’s share price breaking down barriers time and time again.
While this cycle is not guaranteed every time, it’s a reliable trend for the company, serving as a longer-term earnings driver.
While underlying concerns with demand and market saturation can cast a shadow over consumer confidence, there’s no denying that Apple’s stock price doesn’t look like it’s slowing down any time soon.
It is essential to monitor any headlines that could impact motivation, including trade tariffs, sales performance, and profit guidance. If negative news filters into the sentiment of traders, then a correction could be around the corner.
So, if you are trading Apple stock, be aware that the bullish run could end at any time.
