Apple is reporting after the close tonight. We are not in favour of trading on such events without the proper equipment (that includes every retail investor) but if you were to insist, here is a guess, a wild guess.

It looks like wave 4 on the way up was at about $307 even if that is not patently clear. 61.8% of the total value off the peak of $700 equates to $270. Both are very normal levels for an initial pull back. One possibility is that we are in a triangle wave 4 or B. If it is a B than we could go a lot lower so lets assume it is a 4th wave. That would target about $100 starting from the top of e which does not yet exist so ignoring that detail $100 down now would get us to $322 but not without a month of going nowhere. We will know a little more in an hours time.

Then, Nov 9, 2012 and now;

At first we expected the stock to go to the bottom trend line of the channel. It did not get much lower than the midpoint, give or take. That brings the target for an a-b-c correction a little higher to about $400. That corresponds to about a 50% drop of the last complete up leg that starts a little under $100. The break of this channel is significant from a technical standpoint even if it is hard to immediately fathom why this stock should drop that far. The stock trades at a modest p/e of about 10, has $137 bln. in it’s war chest and reported earnings were pretty well as expected and quite respectable. Just not as outrageously good as usual? XOM is almost the biggest again.

AAPL probable completed a 5 wave sequence at the $700 level. The drop has been breath taking as is usual with momentum stocks as there was no reason to be up there in the first place. We are now about to re-enter the channel that in our estimation was wave 3 (see previous blogs). Things are pretty oversold as is, so a rebound could start any moment but preferable from the bottom of the channel. Corrections are always 3 waves or combinations thereof and here we have only one so expect a b and c to follow.

Counting the waves is not an easy task, certainly not if you haven’t got the detailed charting required. Superficially this looks like 5 waves, from $6 to $700. If correct that would imply a drop to about $350 for starters. This would be a conservative estimate that may even apply in an ongoing bull market. The risk/rewards just do not warrant holding on any more. This week has a lot of announcements and so on so we would exit now.