Will Apple Watch Preorders Push Apple Higher?

As Apple (NASDAQ:AAPL) gets ready to launch Apple Watch on Apr. 24, its stock is working on a flat base that could launch a new price run. While the tech giant has had impressive success with Apple Pay and updates to the iPhone, iPad and MacBook product lines, the new smartwatch is the first completely new device under CEO Tim Cook, who took over from Steve Jobs in 2011.

Cantor Fitzgerald analyst Brian White predicts Apple will sell 20.6 million Apple Watches in its first year. And influential Apple analyst Gene Muenster expects 1 million units to be sold during the opening weekend.

Key Fundamentals

After stumbling in 2013, earnings growth has bounced back, including a 48% gain last quarter. Sales growth has risen in each of the last three reports.

Apple has a 34% return on equity and 94 Composite Rating. While its Accumulation/Distribution Rating is a mediocre C-, its 1.8 up-down volume ratio points to institutional demand.

Chart Analysis

Apple reset its base count in 2013, when it undercut the low in a prior pattern. The stock is now working on a flat base as part of a longer base-on-base formation.

It’s not unusual to see base-on-base patterns in this type of roller-coaster market, since stocks will break out, then quickly pull back to form a new pattern before rising at least 20%. That mirrors the market’s seesaw action.

Apple has been testing its 50-day moving average and has so far found support.

See if Apple Watch preorders, which begin Apr. 10, or some other catalyst can push the stock past its 133.70 buy point on heavy volume. But don’t ignore overall market conditions, since it’s risky to buy stocks when the indexes are showing signs of weakness.

See related video at Investors.com/ibdtv.

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