Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

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.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos