The historic surge in Apple Inc.’s stock on Wednesday is finally giving investors something other than declining iPhone sales to talk about, and could confirm what Warren Buffett may have believed several months ago, that a bottom has already been seen.
The stock (AAPL, -0.12%) ran up 6.5% to close at a three-month high. The split-adjusted price gain of $6.28 was the second-biggest one-day rise in Apple’s history, in the wake of the technology giant’s better-than-expected quarterly results. It was just behind the biggest-ever gain of $7.10 on April 25, 2012.
(A 7-for-1 stock split went into effect on June 9, 2014, meaning the actual April 25, 2012 price gain was really $49.72).
Wednesday’s rally comes at a time when some analysts were starting to believe the worst was behind the company.
Analyst Tavis McCourt at Raymond James turned bullish on Apple for the first time since the stock peaked 17 months ago, as he upgraded the stock to outperform after being at market perform since April 10, 2015.
On Tuesday, Bank of America Merrill Lynch analyst Vivek Arya said he believes that the upbeat outlook Texas Instruments Inc. provided in its second-quarter report “reflects the trough in iPhone sales.”
Here are some other potential talking points for investors:
• Warren Buffett’s Apple trade is starting to look pretty good, Carl Icahn’s not so much
Buffett disclosed in May that his Berkshire Hathaway Inc. (BRK.B, -0.10%) owned 9.8 million shares of Apple as of the end of the first quarter. If he still owns that amount, he could have made $61.6 million on his Apple bet in one day.
Meanwhile, the stock was still down 5.5% from the March 31 close of $108.99. But the filing doesn’t detail when or at what price the shares were bought, which means there’s a good chance Buffett is already making money on his investment.
The stock traded within a range of $92.39 to $110.42 during the quarter. It closed below current prices on 48 of the 61 days (79%) during the quarter. The average of the volume-weighted average closing prices during the quarter, based on an analysis of FactSet data, was $99.59.
Separately, Carl Icahn said in late April that he had sold his entire stake in Apple during the first quarter. He had owned 45.8 million shares as of Dec. 31.
• Apple’s stock may have just entered a new uptrend
One of the basic tenets of the Dow Theory of market analysis, which has remained relevant to chart watchers for a century, is that a trend is assumed to remain in place until it gives a definite signal that it has reversed, according to the Market Technicians Association. Another tenet is that an uptrend is defined by a pattern of rising peaks and rising troughs.
Apple’s stock made a higher high Wednesday, to go with the higher low it made in June. That would suggest that a new uptrend has started, and that the 15-month downtrend has ended.
One of the basic tenets of the Dow Theory of market analysis, which has remained relevant to chart watchers for a century, is that a trend is assumed to remain in place until it gives a definite signal that it has reversed, according to the Market Technicians Association. Another tenet is that an uptrend is defined by a pattern of rising peaks and rising troughs.
Apple’s stock made a higher high Wednesday, to go with the higher low it made in June. That would suggest that a new uptrend has started, and that the 15-month downtrend has ended.
• Apple’s is about three-quarters of the way to a new bull market
The stock’s selloff from its record close of $133 on Feb. 23, 2015 was labeled a bear market by many chart watchers on Aug. 21, 2015, when it closed more than 20% below that high. It has remained in a bear market, as subsequent bounces peaked in November 2015 and February just shy of the 20% bull market threshold.
The stock has climbed 14% from the May 12 low of $90.34. It has to close at or above $108.41 ($108.408 to be precise)--a 5.3% rise from current levels—to start a new bull market.
• The Dow almost closed up because of Apple’s stock
Apple’s stock price gain is contributed about 43 points to the price of the Dow Jones Industrial Average (DJIA, -0.13%) which closed down about 2 points. So far this year, the stock is still down $2.31, or 2.2%. That has shaved about 16 points off the Dow, which has gained 1,047 points year to date.
Since Apple joined the Dow on March 19, 2015, the stock has dropped $24.55—that is worth about 168 Dow points—while the Dow has gained 513 points.
• Apple’s adding more market value in one day than the total value of more than three quarters of the S&P 500
Apple has about 5.48 billion shares outstanding, according to FactSet. That means the day’s price gain added about $34.4 billion to the technology giant’s market capitalization. There were 372 companies in the S&P 500, or about 74%, that had total market caps less than $34.4 billion, according to FactSet.
There is one company within the Dow, Travelers Companies Inc. TRV, -1.18% that had a smaller market cap--$33.57 billion—than what Apple was gaining.
The stock’s selloff from its record close of $133 on Feb. 23, 2015 was labeled a bear market by many chart watchers on Aug. 21, 2015, when it closed more than 20% below that high. It has remained in a bear market, as subsequent bounces peaked in November 2015 and February just shy of the 20% bull market threshold.
The stock has climbed 14% from the May 12 low of $90.34. It has to close at or above $108.41 ($108.408 to be precise)--a 5.3% rise from current levels—to start a new bull market.
• The Dow almost closed up because of Apple’s stock
Apple’s stock price gain is contributed about 43 points to the price of the Dow Jones Industrial Average (DJIA, -0.13%) which closed down about 2 points. So far this year, the stock is still down $2.31, or 2.2%. That has shaved about 16 points off the Dow, which has gained 1,047 points year to date.
Since Apple joined the Dow on March 19, 2015, the stock has dropped $24.55—that is worth about 168 Dow points—while the Dow has gained 513 points.
• Apple’s adding more market value in one day than the total value of more than three quarters of the S&P 500
Apple has about 5.48 billion shares outstanding, according to FactSet. That means the day’s price gain added about $34.4 billion to the technology giant’s market capitalization. There were 372 companies in the S&P 500, or about 74%, that had total market caps less than $34.4 billion, according to FactSet.
There is one company within the Dow, Travelers Companies Inc. TRV, -1.18% that had a smaller market cap--$33.57 billion—than what Apple was gaining.
• Investors are as happy about Apple results as they’ve been in over two years
Apple’s stock posted the biggest one-day, post-results percentage gain since it rose 8.2% on April 24, 2014, after the company reported fiscal second-quarter results.
The gain also broke a mini-streak of disappointing results, as the stock dropped 6.3% the day after the last quarterly report, and 6.6% the day after fiscal first-quarter results.
The stock also moved a lot more than options traders were anticipating. Through Tuesday’s close, an options strategy known as a straddle, which is a pure volatility play involving the simultaneous buying of bullish and bear options, had been pricing in a move of about 4% in either direction through the rest of the week, according to FactSet data.
By: Tomi Kilgore (MarketWatch).
Photo 1: Thing Link.
Photo 2 & 3: Apple.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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