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Apple's Chart Still Pointing to Lower Prices


Apple's chart continues to indicate it's due for a major correction.

Much as I like Apple (AAPL) as a company and mourned the death of Steve Jobs, Apple's chart is not looking terribly promising for bulls. When discussing the issue with a friend, one of the topics that came up is how Apple really is (or was) Steve Jobs. The last products that Jobs had a direct hand in creating will be released in the fairly near future, and the charts seem to be indicating that either Apple will not recover well from his loss, or the world is going south fast.

(Before I get lots of angry responses about how Apple is the greatest company ever – I don't disagree that it is a great company. But the charts seem to be indicating that something is afoot. I don't know whether the coming issue has anything at all to do with Apple at all. Recall 2008 when Apple plummeted; Apple may be a great company, but it cannot fend off global economic problems or a liquidity-driven crisis.)

From a broader market standpoint, Apple is clearly a huge market leader. When Apple starts looking sick, it's not a good sign for the broad market. In my opinion, Apple's charts are pretty clear that lower prices are coming. By corollary, we can assume that this means lower prices for the broads as well.

The most bullish short-term scenario I can currently see would be if Apple is forming an a-b-c lower (with wave a and b complete) for wave B of e; one last gasp higher would then follow. I realize that my labeling of "e" may not fit the traditional Elliott nomenclature; sometimes I label things more for clarity of comprehension for those not overly versed in EWT. (See wave "e" on daily chart, below... this is the same chart I posted when I called the top in Apple on October 18). I would give the B of e scenario maybe 15% odds.

Click to enlarge

On the 10-minute chart, it again appears that Apple is due more downside, which jives with the conclusion that the October high marked a significant top. Early targets point to 350-373, though could easily stretch much lower. Here, the most "bullish" short term scenarios I can see would be:

1. This is part of an a-b-c as mentioned above (unlikely).

2. Red Wave ii extends upward in some fashion (but stays below the October highs) before breaking the recent lows (very unlikely).

3. Red Wave ii is actually a fourth wave, so we make a marginal new low (see black "Alt: 1"?) then rally slightly before we head down in earnest (possible, but unlikely due to the structure of the move down so far).

Click to enlarge

The one-minute chart below zooms in on the most current wave structure since Oct 30, and explains why I think the "Alt: 1" scenario shown above is less likely... though still possible:

Click to enlarge

All in all, I think Apple presents a very clear case for lower prices. In my opinion, this is about as clear as it gets, chart-wise. Nothing's 100%, but this chart series is the type that makes you lean into the 90% category. It's always possible I'm wrong, but I would be absolutely shocked if Apple's next significant move isn't down.

This article was originally published on Pretzel Logic's Market Charts and Analysis.

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No positions in stocks mentioned.
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