This is the question on every trader’s mind over the past few days. Upon opening last Wednesday – April 26th – the share price of Apple fell by almost 8% – highlighted in the chart below. The share price fell from $104.35 to $96.01 – following the news that their quarterly sales revenue has dropped for the first time since 2003. This has resulted in the loss of about $46 billion of their market cap.
Since then the share price of Apple had continued to fall – caused in no small part by the recent developments in regards to billionaire Carl Icahn selling his stake of 7 million shares. Icahn told CNBC last Thursday that he no longer has a position in Apple over of concerns about the relationship between the company and China. He cited China shutting down Apple’s iTunes Movies and iBooks services.
Apple is an example of an equity whose share price tends to experience aggressive breakouts and relatively short periods of consolidation. This makes Apple an ideal equity for trend traders who capitalise on the large movements in the price of securities. We can see from January/February that the current price level of Apple stock has previously acted as a floor – preventing the share price from falling any further. Traders will now be waiting in anticipation for the market open today, to see if the price retraces from this level of support or whether we will see this current breakout continue.