McClellan Chart in Focus: AAPL Still Following Its Quarterly Pattern – By Tom McClellan


Chart In Focus

October 29, 2018

We are in a time when “normal” relationships are not working, and when any slight hint of misperformance is getting punished.  So it is fascinating to see that AAPL’s normal quarterly price behavior pattern is still “working”, something I discussed here back in August.

AAPL’s share price has a pretty regular pattern which plays itself out over each calendar quarter.  Apple Corp. releases its quarterly earnings report usually on the 1st day of the month, one month after the end of the calendar quarter, and so the next one is due out Nov. 1.

In the standard pattern of price behavior, the release of that earnings report results in a post-release rally in AAPL’s share price.  The one glaring exception to this “rule” occurred in February 2018, when AAPL got caught up in the minicrash which followed the short-VIX squeeze in January 2018.  That Q1 2018 price plot is highlighted in pink in this week’s chart, to help accentuate just how different it was from the normal behavior.

Most of the time, the month leading up to the earnings release is a choppy sideways affair.  Then there is a positive reaction in AAPL’s share price to the earnings news, and that positive mood lasts until the 3rd month of the calendar quarter, when AAPL flattens out again and waits for the next upward stimulus.  That is how it “usually” works, unless some big exogenous factor puts a thumb on the scale, like what happened in Q1 of 2018.

During the big selloff in October 2018, we have seen post-earnings selloffs in Amazon, AMD, Netflix, Alphabet (Google), and others.  No amount of good news is good enough this month, or so it seems.  So AAPL has a big challenge to survive this environment when it reports earnings after the close on Thursday, Nov. 1.  Perhaps AAPL can be the spark which breaks the pattern of investors selling the big leaders no matter what the earnings report says.  Its price behavior during the month of October seems to indicate that AAPL is following the typical quarterly pattern.

Tom McClellan
Editor, The McClellan Market Report

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About the author

Sherman and Marian's son Tom McClellan has done extensive analytical spreadsheet development for the stock and commodities markets, including the synthesizing of the four-year Presidential Cycle Pattern. He has fine tuned the rules for interrelationships between financial markets to provide leading indications for important market and economic data. Tom is a graduate of the U.S. Military Academy at West Point where he studied aerospace engineering, and he served as an Army helicopter pilot for 11 years. He began his own study of market technical analysis while still in the Army, and discovered ways to expand the use of his parents' indicators to forecast future market turning points. Tom views the movements of prices in the financial market through the eyes of an engineer, which allows him to focus on what the data really say rather than interpreting events according to the same "conventional wisdom" used by other analysts. In 1993, he left the Army to join his father in pursuing a new career doing this type of analysis. Tom and Sherman spent the next 2 years refining their analysis techniques and laying groundwork. In April 1995 they launched their newsletter, The McClellan Market Report, an 8 page report covering the stock, bond, and gold markets, which is published twice a month. They utilize the unique indicators they have developed to present their view of the market's structure as well as their forecasts for future trend direction and the timing of turning points. A Daily Edition was added in February 1998 to give subscribers daily updates on their indicators and also provide market position indications for stocks, bonds and gold. Their subscribers range from individual investors to professional fund managers. Tom serves as editor of both publications, and runs the newsletter business from its location in Lakewood, WA.