Apple share price analysis for August: will it rise up to $455?

The technicals look positive and shares are likely to continue to run up

On July 15, the General Court in the EU (the second-highest court in the union), ruled that Apple did not have to pay back taxes to the Irish Government. The General Court said that the European Commission (EC) did not make a convincing argument that Apple received an illegal subsidy from the United States. The case stems from a 2016 decision against Apple by the EC. The decision helped propel Apple shares up to $400 per share.

The news that Apple will not have to pay more than 13bn in back taxes, helped propel the shares and push the price to earnings ratio (PE) above 30. This is the highest level since 2007. The highest quarterly PE ratio on Apple shares is 38.6, approximately 26 per cent higher than current levels. In theory, this would mean the shares could rally another 26 per cent and still not reach a two-decade high in its price-to-earnings ratio.

The seasonals remain strong

Apple shares generally rally in August even after surging in July. Over the past 10 years, the share price has increased 60 per cent of the time in August for an average gain of 4.3 per cent. This compares to climbing 90 per cent of the time in July over the past 10 years for an average gain of 6 per cent. Despite the surge in the price of the stock the implied volatility on Apple shares remains elevated. The VXAPL (Apple VIX), measures the implied volatility of the “at the money” strike price on Apple shares. The current reading on the VXAPL is 47 per cent, well below the highs in March near 104, but well above the 2019 average near 25. 

Apple share price technical analysis

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Apple shares continue to rally and are poised to test higher levels. The last time the share broke out to fresh highs, they rose 39 per cent, which would put the share price near $455. Short-term weekly momentum is positive as the fast stochastic recently generated a crossover buy signal. The current reading on the fast stochastic is 95, well above the overbought trigger level of 80 and it could foreshadow a correction. The relative strength index is also rising reflecting accelerating positive momentum. The current reading on the RSI is 76, above the overbought trigger level of 70, which could foreshadow a correction. The MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory pointing to higher prices. 

Apple stock analysis: the bottom line

Apple shares are on a tear and are likely to continue to run up, with a target of $455. The performance in August is generally positive, and an elevated VXAPL shows that complacency has not set in. The share price is overbought but the RSI can continue to rise. The PE is at elevated levels but also can still climb. While it’s unclear if Apple can rally beyond its earnings on July 30, there is still room for the share price to run.

Apple Inc
Daily change
147.38
Low: 145.61
High: 148.36

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