Is Apple Going to Recall the iPhone 4?

The plot has thickened a bit, as Apple has called a Friday press conference at 10 AM Pacific time to "discuss" the iPhone 4. A spokesperson for the company would not say if the press conference would deal with the reception problems or not. This secrecy has caused quite a bit of overnight speculation that there may be a recall in the works. If the iPhone 4 were recalled, CNET suggests it could cost as much as $1.5 billion, a substantial amount. Laying out as much as $1.5 billion to rectify this situation may seem a bit much; but of all the companies out there, Apple may be able to afford the fix.

No matter the cost, a recall may be the only way for Apple to fix this whole SNAFU - what might such a move do to the stock? Let's take a look. Looking at a one-year chart for Apple (available here), the stock is cruising along the support of the $250 level - the problem is that the shares face a bit of overhead pressure from their 50-month moving average. This trendline acted as support in the past and could now act as resistance given the opportunity. Moreover, it appears that the 50-month trendline has started to turn lower - a development that could result in the trendline pushing the stock lower. One thing is certain, the stock will have to power through this trendline in order to challenge its late-June high in the $275 region.

Let's play a little hypothetical game here - what if Apple announces a simple fix to the problem tomorrow? Could we see the stock advance? Of course, that is the beauty of a news event - the stock could see a rather drastic move in either direction. The problem is determining which direction ahead of the event. That said, a technical analysis of the stock suggests that a rally will find the going a bit tough thanks to the 50-month moving average. On the other hand, there isn't a great deal of support underneath the stock should the event disappoint, suggesting a drop could be substantial. There are some that suggest Apple shares are immune to bad news . We may find out tomorrow.