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Why Should Apple and Twitter Stocks Be in Your Portfolio?


Twitter and Apple were in the spotlight last week with the social media company rallying to the best level in a month and the smartphone manufacturer which hit the highest point in a year. The timeline of the events which led to these moves for Apple is the following:

On Wednesday, 4th of December, Apple announced the acquisition of Topsy for 200 million dollars, a company that analyzes Twitter data by allowing users to analyze millions of Twitter posts, helping them figure out trends, identify influential Twitter users and measure the effectiveness of campaigns on the social network. According to The Wall Street Journal, Topsy is one of Twitter Inc. partners that have access to all tweets since 2006.So why did Apple buy Topsy? Or, let me put it this way, why would Apple ever be interested in Twitter’s data? Because social media is kind of THE thing at the moment, could be one answer.

Remaining the top U.S. smartphone manufacturer in the October quarter, in a market where 149 million people in the U.S. own smartphones and according to comScore with a market share of nearly 41% bring me to a second answer. In a more challenging mobile and social world in which Apple’s stake is threatened by its competitors, the smartphone manufacturer made a smart move adapting to the social media business ecosystem of our days.
Who is the winner of this deal? Both of them, Apple by integrating Twitter within its own software which in turn could be used to boost Apple’s own social networking strategy and Twitter by enhancing its image of a growth company and proving it is on right path towards the profits every investor expects from the social media company.

Thursday, 5th of December, was that kind of day when you buy on the rumor and sell on the news. Following a Wall Street Journal report late Wednesday that citing an anonymous source familiar with the matter, said Apple signed a deal for Chinese telecom giant China Mobile to carry the iPhone beginning in mid-December, Apple reached a 52-week-high on Thursday as the iPhone maker’s shares rose $10.17 to $575.14.

“We are still negotiating with Apple, but for now we have nothing new to announce,” China Mobile spokeswoman Rainie Lei said, declining to elaborate. Apple also declined comment. After all, there was no deal yet and Apple ended the day with a gain of $2.90 a share, closing at $567.90.
Why it is so important that Apple make this deal? China Mobile is the world’s largest mobile-phone carrier in terms of subscribers, with more than 700 million. The move would make Apple’s latest iPhone models available to a network that has more than 700 million mobile-phone subscribers which translates into big business for the Silicon Valley-based company.

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What Happened to Apple?

Apple Inc., as usual, released a new product for 2013. Actually this year there were two products released. Almost everybody expected the 5S to be made known, but there were rumors that a new and cheaper version of iPhone will be also released so that they will have a better leverage in competing with Samsung and others in this business.

The new iPhone 5S, top of the line model, looks identically  with iPhone 5, but it’s got a better camera, a faster processor and Apple added a fingerprint scanner for a faster unlock. For this model customers will have to pay (just as for the last iPhone 5, when it was released) $650, or $199 with contract. They are keeping the same pricing strategy as before. While a new model is released, the price for the older models drops with $100.

The second model released this year is iPhone 5C. Well…this phone is nothing of what we were expecting. It is not a cheaper version for the customers to buy, but most probably it is a cheaper model of the iPhone 5 for Apple Inc. to build. It has practically the same functions as the model released last year, but it is made of plastic and comes in different colors (green, yellow, blue, pink and white). The price for the iPhone 5C it is $550, or $99 with contract.

Apple’s strategy for this year is like always, to maintain the costs and raise their profits. The fact that they did not get on the market a cheaper version of iPhone might be a bet than could cost them some money, but we should wait for the sale results before throwing the rock.


Chart: AAPL, Daily

From the technical point of view, the price of Apple’s stocks was in an uptrend from July. After a short consolidation, today’s opening was with a negative gap that brought the price all the way back to 465$ from 500$ per share. It seems that the new releases did not get the investors trust and confidence. At this point we can say that this drop could be only a corrective move for the prior trend and a retest of the Double Bottom’s base line.

If the price will close, on a daily basis, under 466$ per share, there is a big possibility for the down move to continue all the way to a 0.618 Fibonacci retrace, at 436.67$. On the other hand a bounce from here could end up by covering the gap, or why not trigger a rally that would hit the Double Bottom’s target at 550$ per share.

Apple Inc. Is Signaling a 5% Drop on Rising Wedge


Chart: AAPL, H1

The stock of the week is Apple Inc. with a pretty interesting price pattern.  After the 15% drop started at the beginning of June the stock managed to gain back 61.8.

On the way up the price started drawing a Rising Wedge, which topped at 430.50$ per share. The price pattern was formed during the last 3 weeks. In all this time it can be observed that the volume started to drop. Next to this signals we can also add the 14 periods RSI which has made a negative divergence and it dropped under its trend line.

Now the price got very close to the apex of the pattern. The width of the Wedge is 21.50 dollars. If the pattern will be confirmed by a close, on a one hour chart, under the lower line, we can expect for the stock to lose at least 5%. Why at least? Because if we look at the trend, it is descending, so a new drop might become another impulse for the current main trend.

Even though our favorite scenario is on the down side, we have a backup. If the price will break and close above 431$ per share we will revise our analysis.

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