Apple could jump to $700 in 3 months

Sure, the tech giant's China deal is good news, but that's not why we see the company making a big leap early next year.

By StreetAuthority Dec 11, 2013 2:36PM
The Apple Inc. logo is displayed on the back of the new MacBook Pro David Paul Morris/Bloomberg via Getty ImagesBy Jim Woods                                                                                  

Last week, we got news that Apple (AAPL) finally inked its much-anticipated deal with China Mobile (CHL) to start offering iPhones on China Mobile's massive network.

Although many Apple watchers had figured out that this was basically a done deal -- thanks to information discovered on a website owned by a China Mobile subsidiary that had recently started taking preorders on the iPhone 5s and 5c -- confirmation of the news was a welcome development.

From a sheer size perspective, the China Mobile deal is fantastic for Apple, as it gives the stalwart personal technology company the opportunity to sell iPhones to China Mobile's 740 million subscribers. To put that in context, consider that the number of China Mobile subscribers is more than double the entire U.S. population. If Apple can capture even a modest percentage of China Mobile users, we are talking about hundreds of millions of iPhones sold.

Apple shares rose only modestly in response to the news, but that shouldn't be read as the market not liking this deal. As mentioned, the market had already expected the deal was going down, and that's a big reason why Apple has spiked nearly 9% in the past month.

What I think is the far more important reason why Apple shares have been so resurgent of late doesn't have a lot to do, at least not directly, with the headlines. Rather, the stock is benefiting from some good, old-fashioned bullish technicals.

The chart below shows that the stock formed a solid base at the $520 level from mid-October through mid-November. That forming of a four-week base gave traders some confidence that AAPL would hold up at that level, and that the move above the 50-day and 200-day moving averages in September was sustainable.

Next came a host of bullish holiday shopping forecasts for Apple, including positive comments from Cantor Fitzgerald's Brian White, who wrote that Apple is "best positioned to benefit from this holiday season" due to the company's broad product refresh in its iPad, iPhone and MacBook products.

The holiday buzz, along with what I suspect is a realization that Wall Street simply became way too bearish on AAPL this summer, was the combination the smart money needed to send the stock breaking out of that $520 trading level and past the $570 mark.

I suspect that if Apple enjoys strong holiday sales, then its current price will be just a stop along the road back toward the $700 mark.

Action to take:
-- Buy AAPL at the market price
-- Set stop-loss at $514, approximately 10% below the current price
-- Set initial price target at $700 for a potential 23% profit in three months

This article originally appeared on StreetAuthority's sister site, 

More from ProfitableTrading
Dec 11, 2013 2:52PM

" What I think is the far more important reason why Apple shares have been so resurgent of late doesn't have a lot to do, at least not directly, with the headlines. Rather, the stock is benefiting from some good, old-fashioned bullish technical."

The Best Is Yet To Come.

Dec 11, 2013 10:01PM
More likely that Apple loses more ground than gains any. It's a dead venue.
Dec 11, 2013 4:12PM
When does the Apple hype at MSN stop?  Jim Jubak said it was going over $1,000 a share within 12 months and that was over 8 months ago.  All these alleged "experts" are clueless.  Take away the government intervention on a monthly basis along with the slippery accounting rules, tax breaks for big corporations and the continued lowering of analysts forecast to make sure the numbers "work" then let's see how the market reacts.  It's all manipulation..
Dec 11, 2013 3:05PM
Apple could go fall to $400. in  3 months also.
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