Technical view: the chances of a rebound are growing

The US market continued to decline on Friday: the S&P lost 1.9%, the Nasdaq fell 2%. All 11 S&P sectors ended the day in the red, losing from 0.5% (housing and utilities) to 3.4% (energy).



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The market was prone to pessimistic sentiment, completely ignoring the positive in the macroeconomic news. Household incomes rose by 0.6% in December (0.1% was expected). Personal spending decreased by 0.1% (a 0.5% decline was expected. The number of transactions concluded for the sale of housing decreased by 0.3% (a decrease of 0.5% was expected). The index of manufacturing activity in Chicago in January rose to 63.8 (expected 58.0).

Technical picture: in the premarket, we almost reached the lower limit of the 3640 channel and bounced back. If the recovery of the quotes continues, it is likely that they will return to the resistance line of 3760. If the correction continues, the target will be the 3640 support line.

Brent

Brent has fully recovered from the previous day's losses and is trading higher in the morning. We continue to observe a decrease in volatility in the oil market, as well as a prolonged consolidation near the level of 56. If the growth continues, we can expect a move to the resistance level of 60. If the correction continues, then a decline to the support line of 52 is most likely.

The volatility in the foreign exchange market continues to be high. The opening of trading on Friday passed above the level of 76. During the day, the dollar-ruble pair updated the low of the previous day, but by the close it returned back to the key level of 76. If the ruble strengthens, the target will be the lower limit of the 74.50 channel. In the event of an update to Friday's high, the ruble is likely to continue weakening to the resistance level of 77.50.


The Russian market has been below the maximum values for more than 2 weeks. On Friday, the weakening continued, with many securities trading below their foreign counterparts. The end of trading was just below the support line of 136. In the case of a reversal, a rebound to 140 is most likely. If the decline continues, we can expect a correction to the support line of 132,500.

Before opening, a positive news background increases the chances of a rebound. America and Asia are trading in the black: s&p +0.48%, Nasdaq +0.55%, csi300 +1.25%, n225jap +1.36%.

Apple's quarterly report beats expectations

On Wednesday, Apple reported results for the first fiscal quarter of 2021. The company showed very strong results. Almost all of the company's core operating indicators were better than expected.



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The main indicators are the following:
Revenue +21% to $111.44 billion, analysts ' consensus forecast - $103.12 billion.;
Services revenue rose 24% to $15.76 billion, forecast $14.89 billion;
Earnings per share + 34% to $1.68, consensus forecast $1.42;
Revenue in the Greater China region increased 57% YoY to $21.31 billion.

A strong report was expected in connection with the release of the new iPhone 12 model, which was introduced in mid-October 2020.

The iPhone 12 is the first model from Apple equipped with 5G technology, and can serve as the beginning of a new "super cycle" of smartphone updates. Official iPhone sales figures fully met and even exceeded high expectations. The success of the new model allowed Apple to come out on top in smartphone sales, overtaking competitors such as Samsung and Huawei. The number of smartphones delivered was 90.1 million units — a record for the company. Quarterly revenue from the sale  and reviews of the iPhone also amounted to a record $65.6 billion, expected $60.3 billion.

The company has experienced significant growth in all geographic segments. I would especially like to note the growth in sales in "Greater China", where high deferred demand for new iPhones provoked an increase of 57%.

iPhone sales bring the company more than 50% of revenue, and the excellent performance in this segment undoubtedly has a strong positive impact on the company's results. But we have repeatedly said that an even more important long-term growth driver for the company is the transition to the sale of subscription services.

The sale of subscription services (SaaS) has a stable and predictable cash flow. Revenue from services also usually generates more profit. A high proportion of services is very valuable in terms of business stability and valuation. It is not surprising that increasing the share of sales of services is considered a key strategy of the company.

At the end of the reporting quarter, revenue from the provision of services amounted to $15.76 billion, which is 24% more than a year earlier. The services segment is growing at a faster pace than total revenue, which increased by 21%. This means that the strategy to increase the share of services is being implemented.

In the first fiscal quarter of the year, the share of services is traditionally lower than the annual average, as the share of iPhones increases due to the release of new models. But by the end of all of 2021, the share of services in total sales is likely to exceed last year's level of 19.6%.

The success of the company with the update of the iPhone line and the transformation towards services are the basis for a positive view of the company's business. In the future, you should pay attention to how successfully Apple is developing its own ecosystem, which is important for attracting new subscribers and increasing the share of services.

So far, the company is successfully moving in this direction, expanding the list of various services available by subscription. As part of this strategy, services such as Apple TV+, Apple Music, Apple Arcade, Apple News+, iCloud and Fitness+have already been launched.