Prior to Apple's Earnings Report, Charts Suggest a Bullish Setup

We’ve reached a crucial point in the earnings season, with several major tech companies set to release their quarterly results. Among them, Apple stands out as the most anticipated report of the week. There are several technical and fundamental reasons why I see potential for an upward move in Apple’s stock, making it a compelling candidate for a bullish position heading into earnings.

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Let’s begin with the technical analysis. A look at Apple’s long-term weekly chart reveals a strong bullish trend stretching over the past decade. One key indicator—the 200-week moving average, marked by a purple dotted line—has consistently served as a reliable support level. In three specific instances highlighted on the chart, this moving average successfully prevented the stock from dropping further.

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Most recently, amid heightened market volatility, Apple’s price briefly dipped below the 200-week line, only to rebound and close the week above it. This action reaffirmed that the long-term uptrend remains intact, despite short-term fluctuations.

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Zooming in to the daily chart, we see another promising technical signal. Apple’s price has moved above the resistance level defined by a red parallel channel—this came after recent market jitters driven by tariff news in April.

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This upward breakout ahead of Thursday’s earnings report is a positive sign. However, the stock still faces potential resistance from its 50-day and 200-day moving averages, which could play a role in how the stock reacts post-earnings. These levels are key as we craft a strategic trade that combines both stock ownership and options.

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At Inside Edge Capital, Apple is a core holding in both our dividend and growth portfolios. But for our shorter-term Active Opportunities model, I’m looking at a more tactical play. I plan to purchase shares of Apple at current levels while simultaneously selling May 2nd $220 call options, which are currently priced at $1.35. This approach isn’t aggressively bullish but allows us to benefit modestly if the stock rises, while also reducing the cost basis through the premium collected.

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Let’s break down the numbers. If we buy Apple at $212 and receive $1.35 from selling the call, we effectively lower our entry cost. That $1.35 premium equates to a monthly yield of roughly 0.636%, which annualizes to about 7.9% if repeated monthly. While I don’t implement this strategy every month, I believe it suits the current market climate—a market that appears inclined to rise but lacks the momentum for a sustained breakout due to ongoing tariff uncertainty.

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Now, let’s shift our attention to the fundamentals supporting a potential upside in Apple’s earnings report. Among the major tech firms reporting this week, Apple stands out for its extensive international revenue exposure.

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This makes the company particularly sensitive to foreign exchange trends. Since the start of the year, the U.S. dollar has weakened significantly—down around 6.3%, which is substantial for currency markets. A weaker dollar boosts the value of overseas earnings when they’re converted back to U.S. dollars, providing a tailwind for Apple’s bottom line.

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This FX dynamic has already shown up in recent earnings elsewhere. For instance, Citigroup benefited from currency tailwinds, while Spotify—based in Luxembourg suffered from a strong euro, which hurt its results. Apple is likely to benefit from the same favorable currency environment as Citigroup, given its global footprint.

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Additionally, we’re anticipating a possible front-loading of sales as customers move to buy Apple products before upcoming tariffs take effect. Although these tariffs did not impact Apple’s second-quarter results, they are expected to take a toll in future quarters. As a result, some buyers may have accelerated their purchases, providing a short-term boost to revenue.

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It’s also worth noting that the iPhone 16, which was expected to launch a major upgrade cycle thanks to its AI integration, had a slower-than-expected adoption. However, it’s likely that many consumers who initially hesitated have since gone ahead with their purchases, providing a lift to sales during this period.

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Lastly, even if Apple’s report includes some soft spots—particularly related to challenges in China—investors may be more forgiving. That’s because the company has already taken proactive steps to diversify its supply chain, shifting production to countries like India and Brazil. These efforts could help cushion the long-term impact of geopolitical and economic disruptions tied to China.

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In summary, both technical indicators and fundamental developments suggest that Apple is well-positioned heading into earnings. The stock has held firm above critical long-term support and is breaking out of resistance zones on the daily chart. Combined with favorable foreign exchange conditions, a possible surge in early sales, and Apple’s ongoing supply chain shifts, the stage may be set for the company to test key resistance levels following its earnings report.

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