Ahead of the anticipated launch of Apple Inc (NASDAQ:AAPL)’s iPhone 6 on the 9th September, we uncover the trading patterns that investors historically adopt around this type of event, providing a strong indicator of how the shares are likely to perform.
In the last few years, the days leading up to and following major new product announcements has been an active time for Apple shares.
Anticipation of new technologies and speculation on the potential for success of new products from this development-driven company has attracted a lot of attention from the media, short-term traders and long-term investors.
Apple’s next big product announcement has been scheduled for September 9th and has the potential to spark significant trading action and potential opportunities over the next several weeks.
Keeping at the front of the pack, particularly within technology, is critical for smartphone companies. Many previous leaders have come and gone from the top spot since the turn of the century including Motorola (NYSE:MSI), Nokia (NYSE:NOK) and BlackBerry (NASDAQ:BBRY), some of which have tried to mount comebacks, only to flounder. Keeping ahead of the main challenge from phones running Google Android, particularly Samsung (LONDON:0593xq) phones can be seen as critical for the continued success of Apple’s shares.
Just yesterday, the introduction of two new Galaxy Note smartphones by Samsung sent Apple’s shares for a loop, reinforcing that Apple needs to introduce something really special next week to satisfy its shareholders and stay in front of its competition. A stumble could spell trouble.
A study of how Apple shares have performed in the days before the official announcement or launch and after the launch shows the shares have staged significant moves in both directions around new product news.
There are two things that appear particularly striking from this analysis:
First, Apple shares have historically performed the best in the days in between the news launch event and the day the new phones appear in stores.
Second, in each of the last seven years, of whichever direction the shares moved in the days leading up to the start of in-store sales, they moved the opposite direction afterwards. In other words, when the shares went up ahead of the start of sales, they historically have gone down afterwards and vice versa.
This action indicates that Apple iPhone launches have historically attracted a lot of speculation from traders who then close their positions afterwards, the classic enter on rumour, exit on news. It also indicates that rallies into the launch price with high expectations which increases the potential for disappointment while declines into the launch price with low expectations, opening the door to positive surprises.
Apple Returns Around iPhone Launches 
* announcement date not available, use 8 days before launch instead
Analysis of action on individual days surrounding potential news shows that both the announcement date and the launch (on-sale) date have been positive on average. It also shows that the strongest periods around the announcement event are the day before through the day after the announcement date while around the actual launch, the strongest period has historically been four days before through to two days after the start of sales.
Apple Chart Analysis
Apple shares have the potential to be particularly active around this launch window.
Since completing a double bottom a year ago, the shares have been steadily marching higher and recently broke through their 2012 peak and the $100.000 (post-split) level to a new all-time high.
This suggests that very high expectations have already been built into the share price about the iPhone6 and potential additional launches like the rumoured iWatch. The RSI indicator is up in overbought territory once again suggesting that the current rally may be getting overextended.
Because of this, any hiccups on launch sales could be met with significant disappointment from the street, and some of the enthusiasm may already be starting to be tempered. Yesterday’s dive back under $100.00 on positive Samsung news indicates how vulnerable Apple’s shares can be and the potential for big moves in both directions through this critical period for the company
Initial support appears near $96.00 a 23% retracement of the shorter-term uptrend followed by $92.20 where a Fibonacci level and prior support cluster. A move back above $100.00 would signal a rebound starting with potential resistance tests near $104.00 the previous high then a measured $107.80.
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