Whats hiding behind recent weakness in Apple's shares?
On a day like this with major shares moving quite sharply it would be a great miss if we didn't pay a close eye on the US technological giant Apple. Has the downtrend ended, is it near the end? Many questions pop in binary options trader’s heads.
So how do we trade Apple
It is essential to focus on the fundamental news surrounding today’s move in the stock. Apple Inc's shares dropped under $400 on Wednesday trading on a heavy volume. This hasn’t happened since December 2011 and the trigger was chip supplier's disappointing revenue forecast which triggered fears about weakening demand for the iPhone and the iPad.
After shares dropped below $400 briefly they bounced back above the figure to close NY trading 5.5 percent lower at $402.80. The company has lost more than 40 percent of its market capitalization since its record high last September when Steve Jobs’ creation was the largest corporation in the world. Intensifying competition has worried investors in the stock and the sustainability of profit margins that the company has established over the years is now being put into question.
The company Cirrus Logic, which makes analog and audio chips for the iPhone and iPad, late on Tuesday said it will record a total net inventory reserve for its fiscal fourth quarter ended March 30 of $23.3 million, most of it due to reduced forecast for one product from one customer. Not naming the customer wasn’t a big mystery for the market players to figure out, since Apple’s orders are forming about 90 percent Cirrus Logic’s business in the last quarter.
All in all it remains to be seen how the company manages to transition between products as the iPhone and The iPad are likely to receive upgraded versions in the coming months and the widely circulated rumors about the iWatch become a potentially new niche for the company. The company also reports its earnings on Thursday so binary options traders must remain vigilant and await more dramatic price moves.
If we take a look at the chart it is crucial the price holds above $400 for now. We advise binary options investors to refrain from big bets until the earnings report is released, but more aggressive players can bet on the put side as traditionally 1st quarter earnings at apple are not stellar. As we came close to the release, analysts had cut back on their estimates for Apple's March quarter revenue on average to $42.53 billion from $42.68 billion.
The company is also expected to announce some 9 percent increase in quarterly revenue, with net profit expected to decline 17 percent to $9.59 billion, or $10.08 a share, according to average analysts' estimates.