Buying Apple stock on AAPL earnings report release

With Q3 2012 AAPL earnings report releasing on July 24th, buying Apple stock should be avoided as quite a few traders mention in their financial blogs. The reason is a possible $40 or more dip depending on the earnings, although Apple has continuously set new records during the last earnings reports. I am also not trading Apple shares at this time, despite the ascending triangle drawn in the daily graph. Apple share price has been soaring for months but has found considerable resistance at $620. The highest traded price for Apple stock was printed in April at $650.


The $620 resistance level has been confirmed 4 times during the last 6 months. That fact alone is enough for any stock trader to respect that level and react accordingly whether the resistance level holds or is penetrated. A couple of finance bloggers have mentioned trading strategies according to which they will be entering long and buying Apple stock a day after the AAPL earnings report, in case the stock price goes above $620. They also remind readers that the reaction in stock market following an earnings report doesn’t reflect the fundamental metrics reported, rather than the psychological effect those metrics would have to investors and traders. Therefore don’t hurry up buying or selling Apple shares when the actual EPS is announced and compared with the estimate figure, but wait for the market’s verdict.


I suspect tomorrow’s AAPL earnings won’t be so spectacular as the earnings that will be reported in Q1 2013. According to the future earnings estimates shown in the image above, Apple will most likely begin promoting and selling their new iPhone 5 in the last months of 2012 or during the beginning of 2013, when AAPL earnings are expected to set new records! Q1 2013 Apple earnings estimates (39) range from $13.63 to $18.48 and given the popularity of Apple products, I fail to see how those estimates won’t be met. Comparing with tomorrow’s EPS estimate of $10.35 it’s easy to realize Apple stock’s potential. Perhaps buying Apple stock even for $600 per share would be considered cheap in a year from now!