Who Will Give More This Holiday? Santa ... or Apple?
Here's why I'm making a bet on AAPL as we enter the season to be jolly.
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Will an Apple AAPL for Christmas work? By my amateur, back of the cocktail napkin (nod to Arthur Cashin) calculations, I've got better than a 3 in 4 shot. That's worthy, in my opinion, of taking a small long position in Apple for the Santa Claus Rally period, which I did this morning. Jim was right: "Own it, don't trade it."
I traded it, profitably... but less profitable I might add, than if I had just watched it.
A fairly stable stock and a fairly unstable market going into a usually volatile, but an often ultimately positive, almost two-week period....
My wife wanted one thing for Christmas. She wanted an iPhone 16 Pro Max. She is a very high-end amateur photographer and has actual cameras of good quality.
That said, she has noticed that she only uses those cameras when she plans a shoot. When something very photographic just happened in front of her, which is when she takes most of her photos, it's on her smartphone. Hence, she asked for the top-of-the-line phone camera, but staying within Apple's ecosystem as we are into our seventh decade on the planet and not at all interested in leaving the comfort of what we know.
No problem. I head to the mall. I know it will be crowded, but not like the old days. Prior to the invention and widespread usage of the internet, getting into a mall parking lot at this time of year was beyond awful. Now, it's just a little more crowded than I would like. I spotted the Apple store from about 75 yards out. No line outside the store. Groovy.
The kid with the red Apple shirt at the entrance (the gatekeeper) asked me what I was there for. I told him. Apparently, the new phones are hotter than I had been led to believe. I was certainly not the only one there to pick up a new smartphone. The salesperson was a breeze, even though they were clearly being overworked. Tis' the season. Setting it up for her will be a pain in the tail, but nothing I haven't done before. If it's infinitely more difficult than I remember, there's always the misnamed "genius" bar back at the mall.
Monday Morning
It was actually released on Sunday, but the financial media for the most part, reported it this morning. Five-star rated (by TipRanks) Dan Ives of Wedbush reiterated his "buy" rating on AAPL and his $300 target price. In the accompanying piece, the Ives team wrote that iPhone 16 is running "slightly ahead to generally in line with expectations."
Ives' people went on to write, "We believe Apple is set to have a strong holiday season ahead as iPhone 16 upgrades across its installed base are trending well into Christmas based on our recent Asia supply chain checks. Importantly, Apple Intelligence has not rolled out in China or many other countries with April the likely timetable for these AI launches along with a Chinese tech partner also named very soon to catalyze the timing of this rollout in this key region."
Some folks may have raised an eyebrow at the description of Ives as a five-star analyst as rated by TipRanks. Ives had famously lost that rating and gone as low as three-stars this year, but with the autumn rally across the tech sector, many of Ives' calls started to look a lot better as did his rating at TipRanks.
The Chart
Readers will see that APPL rallied from mid-April into July and then sold off from there. Support was then found in early August in between what we call the "half-way back" point (50% retracement) and a 61.8% Fibonacci retracement of that entire rally. From there, AAPL formed an ascending triangle pattern that formed resistance in October and then developed successive higher lows from that April starting point all the way through the closure of the triangle, which was bullish.
Taking in the indicators, Relative Strength is strong and on the edge of being technically overbought. Below the chart, readers will see that the daily Moving Average Convergence Divergence is postured bullishly, with the histogram of the 9-Day exponential moving average above zero and with the 12-day exponential moving average still above the 26-Day EMA.
We like to see shorter-term moving averages running above longer-term averages. Here, we have the 21-Day EMA running above the 50-day simple moving average, which in turn is running above the 200-day SMA. That has everyone on board, from swing traders to portfolio managers. The pivot coming off of the ascending triangle stands at $238. AAPL has run from there. Does that mean that this ballgame is almost over? Not necessarily.
My target coming off of that pivot would probably be close to $285, and I might hang on longer than the Santa Claus Rally period lasts, but given that this is a timed trade, if I am up a few percent next Friday, I may just take my football and go home. I'll decide then.
At the time of publication, Guilfoyle was long AAPL equity
