We are contemplating the possibility of a triangle here as a B-wave within an A-B-C correction. Potentially this could take the stock to the 4th wave of previous degree.
Then , a year ago, and now charts as usual;
A year ago we predicted the stock was about to, or had already, peaked at about $128/9. It did go fractionally higher after that, three times in fact, but it would have been an excellent exit point saving you about 28% of your money. (When you talk to your neighbour etc. etc….. you know the routine).
Our first target was $92. It has briefly traded at $91.80, overlapping the top of wave 3. So now the question is where from here. Down. Down to about $70, at least. One technique that is easier to implement than than the rounding top which requires a circle, is to simple assume that things go down at the same rate they went up. That is easy to construct as per the chart on the right, $70 by Aug./Sept. The reason is simple as well. We are going into the year of the monkey and China is now Apple’s largest customer. Monkey see, monkey do! There will be tons of similar products competing with AAPL. They will therefore have to stay at the forefront of innovation which is getting increasingly harder to do, particularly in a market that is starting to get a little saturated, so “growth” will suffer. In the meantime margins will be compressed. The stock is excessively over-owned, particularly by large funds, hedge funds and the like.
Then there is that 200 bln. pile of cash sitting out there somewhere. It is a lot less and if you look at their balance sheet borrowings and deferred taxes they are almost as large, so this does not mean a lot other than that they are doing all they can to defer repatriation of profits.
I think $ 92 was my first target, you can check my blogs. Of course the “rounding top” has little to do with EW but that does not mean that they are not an intrinsic part of the prediction. In fact, to my knowledge, I was the only serious prognosticator to call for AAPL to go down early in 2015. We are now in a wave 3. If you enjoy this kind of stuff it has a lot further to go. Some blame China, I would put it to a relatively useless watch. We are going very fast and a bounce is not out of the question, but it has a lot more downside.
The usual, then April 28 and July 22, and now charts;
Our first sell recommendation was on February the 21ste when the stock went above $130 for the first time. At the time that was enough for one or two of my readers to call in and wonder aloud if I had taken leave of my senses, after all this company only traded at 9x future earnings, had more cash than most countries and would soon be coming out with a completely new i-whatever that would be absolutely irresistible to even the most discerning purchaser.
But then we got a clean triangle that is always a dead giveaway that you are close to the end of something and even the Gainsville boys came out with an identical conclusion. Then late August we got some sort of flash-crash which does not really count as it was over in a blink of an eye (for the record, the stock was down $42 from its peak!). The subsequent a-b-c correction brought the stock back up to about $123 just to show how persistent optimism surrounding this stock is. Now we are in some sort of a third wave, back to $106 and in a very steep part of the “rounding top”.
Institutional ownership is running at about 60% of the total float, that is Vanguard, State Street, Northern Trust, Blackrock and so on. Even the Swiss National Bank reportedly has a little more than 1 bln. worth of the stuff, its largest single foreign stock position. This is taken to be conclusive proof that the stock must go up as all these smart investors cannot be wrong. In other circles this is known as herding.
We will continue with the rounding top concept. It will get steeper so things will happen faster. As a minimum we should drop back to the $92 level and after that to about $50.