Can Apple Move Higher?

With shares of Apple (NASDAQ:AAPL) trading around $549, is AAPL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Apple designs, manufactures, and markets mobile communication and media devices, personal computers, portable digital music players, and a variety of related software, services, peripherals, networking solutions, third-party digital content, and applications. The company's products and services include the iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and further accessory, service, and support offerings. Apple also delivers digital content and applications through its iTunes, App, iBook, and Mac App stores.

Fans of Apple's high-end desktop computers have been waiting for the new Mac Pro ever since it was first unveiled at the Worldwide Developers Conference in June. Earlier this week, Apple announced that the new Mac Pro would become available on December 19. However, it now appears that most Apple customers won't be able to get their hands on the latest model until sometime next year. According to Apple's Mac Pro purchase page, the shipping estimate times for all configurations of the new workstation have been pushed to February. As reported by Cult of Mac, a few initial Mac Pro orders had an estimated shipping time of December 30. "Demand for the all new Mac Pro is great and it will take time before supply catches up with demand," an Apple spokesman recently told Forbes.

T = Technicals on the Stock Chart Are Strong

Apple stock has struggled to make significant progress in the last several quarters. The stock is currently pulling back and may need time to consolidate before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Apple is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Apple options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Apple options	27.48%	90%	88%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
January Options	Flat	Average
February Options	Flat	Average

As of Friday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Apple’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Apple look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-4.73%	-19.85%	-17.97%	-0.43%
Revenue Growth (Y-O-Y)	4.19%	0.86%	11.27%	17.65%
Earnings Reaction	-2.49%	5.13%	-0.16%	-12.35%

Apple has seen decreasing earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have been pleased with Apple’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Apple stock done relative to its peers – Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and BlackBerry (NASDAQ:BBRY) — and sector?

	Apple	Google	Microsoft	BlackBerry	Sector
Year-to-Date Return	3.28%	55.13%	37.35%	-39.30%	15.11%

Apple has been an average relative performer, year to date.

Conclusion

Apple strives to provide innovative products and services that consumers and companies love to own. It now appears that most Apple customers won't be able to get their hands on the latest model of the new Mac Pro until sometime next year. The stock hasn't made significant progress in the last several years and is currently pulling back. Over the last four quarters, earnings have been decreasing while revenues have been rising, which has left investors pleased. Relative to its peers and sector, Apple has been an average year-to-date performer. Look for Apple to OUTPERFORM.