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Apple’s (NASDAQ:AAPL) stock was on a big rebound last week, closing at $571.50 in Friday’s short trading day, near the day high. This means that the stock is up close to 6 percent for the week, and close to 13 percent above the previous Friday’s low, but still long way from its all-time highs of $705.
Apple’s rebound has been driven by a technical rebound from the previous week’s low; a positive overall market sentiment fueled by some encouraging economic signs and calming statements by President Barack Obama, Treasury Secretary Tim Geithner, and House Speaker John Boehner on the fiscal cliff; and a cover story in Barron’s over the weekend.
But will Apple’s rebound continue next week?
It depends on two things: First, the overall sentiment on Wall Street, as it will be shaped by the Greek debt talks in the EU summit, and a string of economic data that will take the pulse of the US economy -- most notably, Durable Good Sales and Consumer Confidence on Tuesday, and October New-Home Sales on Wednesday.
Second, Black Friday and Cyber Monday sales, which are expected to confirm whether Apple maintains its momentum in the tablet market.
Looking beyond next week to the end of the year, Apple bulls have two things on their side: First, the end of the year rally, which favors high-technology stocks. Second, Apple’ low valuation, in comparison to another competitor in the smartphone and the tablet market, Google (NASDAQ:GOOG). Apple trades at a forward (Sept 2014) PE of 9.85,while Google at forward PE of 14.40(Dec 31, 2013).
A few words of caution: Apple is facing a number of headwinds over the long-term, from slow world economic growth, increasing competition in the tablet and smartphone markets and market saturation. Holiday complacency and hype shouldn’t be a substitutes for due diligence.
Also read:
Shopping Around for the Best Tablet Deal
Why Apple Will Win the Tablet Battle of the Holiday Season
The Four Drivers of Corporate Failure in America
Disclosure: Long and short on AAPL with options
