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Mixed Signals Ahead of Apple Report

Dow component Apple Inc. (AAPL) reports Q2 2022 results after Thursday’s closing bell, with analysts forecasting a profit of $1.43 per share on $94.0 billion in revenue. If met, earnings-per-share (EPS) will mark a slight improvement compared to the $1.40 earned in the same quarter last year. The stock rose 7.0% in January after beating Q1 estimates but is now trading more than ten points lower, highlighting a major rotation out of big tech growth stocks.

EU Regulators Take Aim at Big Tech

Europe has emerged as a trouble spot, with headwinds going well beyond the Russia – Ukraine conflict. The European Union has just approved rules to police big tech platforms, demanding they introduce adequate safeguards to fight disinformation. The regulation may also force iPhone and Mac to open up to third party vendors, outside the tightly controlled and highly profitable Apple Store. In addition, anti-competitive behavior will now expose American giants to steep fines and possible divestitures.

JP Morgan analyst Samik Chatterjee lowered his 2022 iPhone estimate to 245 million from 250 million earlier this month, citing the drag of recently introduced low priced models. As he notes “our estimates for iPhone 13 remain largely intact as we expect the combination of recent color variant launches as well as a higher than typical inventory level in the channel against the backdrop of existing supply chain constraints to provide offsets to lower customer spending.”

Wall Street and Technical Outlook

Wall Street consensus now stands at a mixed ‘Overweight’ rating based upon 26 ‘Buy’, 6 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. Boutique firm Global Equities posted the sole ‘Sell’ rating this week, but many publications are hiding this bearish call. Price targets currently range from that firm’s $95 target to a Street-high $215 while the stock is set to open Thursday’s session more than $30 below the median $191 target.

Apple mounted the February 2020 peak at 81.81 in June, entering a strong uptrend that eased into a rising channel in September. This pattern has contained price action for 20 months, reaching channel support for the fifth time this week. Weekly and monthly Stochastics are engaged in sell cycles, slightly raising odds for a breakdown, but accumulation is holding up while the stock has held support in lower time frames. This provides bulls with a mild advantage, heading into the report, but there are no guarantees in this volatile spring market.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

This article was originally posted on FX Empire