Apple (AAPL) Stock Price: Post-earnings slide stalls at key support, bears target 200-day MA

Apple (NASDAQ: AAPL) reported Q1 2021 earnings after the market closed on Wednesday, April 28, and the company lived up to its reputation. Apple easily beat analyst estimates, posting earnings per share of $1.40 versus forecasts for $0.99. Apple revenue came in for the first quarter at $89.58 billion versus a forecast of $77.36 billion. Not really a beat but a smash and grab. The shares quickly rallied to $137 straight after the release but have since slid back consistently and now AAPL shares are trading at $128.

Before we forget, Apple also raised its dividend and added a cool $90 billion to its buyback program. All in all, looks pretty bullish. So why the sell-off?

Apple (AAPL) stock forecast

It is never a good sign when a financial asset, any asset, reacts badly to good news. Clearly, this earnings release was very good news. Analysts did begin to comment that the results might actually be too good (is there such a thing?) and make 2022 comparisons and pace of growth hard to sustain. Well, that is a good problem to have for any company.

The fact remains though that AAPL has not been rewarded post results. Was everything already priced into Apple shares? Given the scale and size of the beat coupled with the dividend and buyback, one would have to think no. The broader market has retraced with the Nasdaq struggling for momentum. But AAPL shares have actually underperformed the Nasdaq since the earnings release as can be seen from the chart below. Since the earnings release, AAPL shares are down 4.2%, while the Nasdaq is down 3.1%. The S&P 500 is down only -0.5% since AAPL earnings.

No matter what way you look at it, the reaction to Apple's earnings is hard to fathom. But price is the ultimate indicator, and the price is lower. Hence, traders must act accordingly.

AAPL has broken out of the second consolidation phase shown below. Given the strength of earnings, most assumed the price would break higher to the $145 and above target, but now it is time to recalibrate the trading strategy. 

AAPL shares broke lower and stalled perfectly at the 100-day moving average support line. The short-term trading trend is now bearish as can be seen from the break of the 9 and 21-day moving averages (MA). These and in particular the 9-day MA can be used as a resistance level to enter new short positions. A break here will see a move back into the $131-135 range, and both levels can be used to play the range and any potential breakouts. 

But given the reaction to the earnings and the Moving Average Convergence Divergence (MACD) indicator crossing into a bearish signal, better to trade from the short side. The Directional Movement Index (DMI) has also crossed negatively with the ADX line showing the trend is reasonably strong, as it is above 25.

That means initiating positions at the 9-day MA with a stop just above and reversing on a break as mentioned. Another bearish strategy is to trade a break of the 100-day moving average at $126.73. Bulls can use this support level to initiate long positions with a stop just below. 

The ultimate aim is the first consolidation phase shown and the 200-day moving average at $118.59.

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