Apple Inc. (AAPL​) is scheduled to report fiscal fourth-quarter earnings after today’s U.S. market close, with the iPhone X expected to start shipping Friday morning. The stock rallied to an all-time high near $170 earlier this week on anticipation of these developments, raising a high bar of expectations even higher.

On Wednesday, Apple shares slipped back from $170, and a bearish engulfing candle suggests that sentiment may already be shifting even before the numbers come out, and that some traders may be preparing to take profits against these events. Whether the stock can continue its advance may depend heavily on the outlook for the iPhone X.

Back in September, Apple launched both the iPhone 8 and X models. The iPhone 8 has been out for a while now and is widely available, but reports suggest that its sales have been sluggish with customers preferring to wait for the iPhone X launch. While the X has been generally well received by critics (which likely helped to boost the stock earlier in the week), it appears that the high-end model could be in short supply and interested customers may have to wait a while, perhaps into 2018 to get their hands on one.

While some would say buzz and limited supply are a good thing, companies need to make money too, and Apple could find itself caught in a hammock. Specifically, results for last quarter and the current quarter could be depressed by sluggish iPhone 8 sales, while the potential slow start to iPhone X sales due to supply constraints means the more popular iPhone X product may not be enough to offset the 8's disappointment.

With the big holiday selling season approaching, guidance for the coming quarter could be critical to how the market reacts to the news overall, along with pre-orders for the iPhone X and indications of just how poorly the 8 has sold. The X not only needs to be a big hit, but Apple needs to be able to get X phones into the hands of customers to offset the 8 shortfall.


The bottom line

Apple shares recently broke out of a $150 to $165 trading channel but have been looking a bit vulnerable with the RSI indicator getting overbought. A failure to break through $170 and a bearish engulfing candle suggest the tide could be turning. Initial support may appear near the $165 breakout point then $155 where the recent rally lifted off from, followed by the $150 round number and channel bottom. If the company's fourth-quarter results are well received and the shares manage to break out over $170, the next potential resistance may appear near $180 based on a measured move from the recent trading range.  

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