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- As AAPL Goes, the Market Goes
As AAPL Goes, the Market Goes
BraVoCycles Newsletter
February 18, 2024
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Market Summary
The market “behaved” the last few days according to expectations.
On Friday, indexes dropped early in the day on hotter PPI, rebounded, and sold off into the close. The action increased the probability that most stock indexes topped last week.
OPEX on Friday brought the usual volatility. SPY closed on Thursday above 502, and options max-pain for SPY for Friday was 497, a 1% down. SPY closed on Friday at 498.96; it was not perfect, but not bad. Most importantly, the 3-wave bounces in most indexes, as of market close on Friday, suggest that the bounce on Friday was corrective and that the new trend is down, but there are no key confirmations yet. I would like to see SPX below 4,991 initially for a stronger indication.
As mentioned in the last couple of newsletters, the intermediate-term picture is pointing down. Raising cash on strength is a good strategy for such a market environment.
AAPL Case Study
Today, we will showcase AAPL using our methodology in the premium newsletter.
First, a piece of news (we do not trade news, but take note of it.)
Significance? Berkshire does not need money. 10 million shares is just a profit-taking or rebalancing. Berkshire still owns over 900 million shares. There is no need to overstate the importance of this sale or make investment decisions based on it; our technical analysis will guide us.
The AAPL Elliott Wave (EW) count is shown in the figure below. It completed the Primary-5 that started in January 2019. According to the EW Theory (EWT) after 5 waves up at least 3 waves down are due, but could be more if it is a trend reversal.
Notice significant negative divergences in RSI, MACD, and EW Oscillator. This indicates a significant loss of momentum simultaneously with a completed EW structure.
There is a significant down potential on a multi-year basis.
The figure below shows the AAPL Nominal 80D cycle target as a gray rectangle. If AAPL gets there in >=3 weeks by crossing red and blue FLDs (forward lines of demarcation, a cycle concept), it will generate a Nominal 18M cycle target in the 150-155 range, for now a preliminary/speculative target.
Based on our proprietary cycle detection algorithm, the time cycle trajectory, the cycle composite including 8 cycles from the weekly chart, is shown below. AAPL is indicated down into late spring or early summer.
The cycle composite from the daily chart agrees. Focus on the near term. Cycle projections become less accurate further out as some cycles vary over time and may affect the cycle composite.
I will be looking generally down for AAPL, and major indexes, next few months but allow for bounces due to shorter cycles; the Nominal 40D (25-26 trading days) cycle is relatively strong and may dominate shorter-term swings, if its relative strength persists. AAPL is an important market leader and will impact DJI, SPX, and NDX.
Seasonality – “February Made Me Shiver …”
In addition to other things, such as cycle, technical, and EW counts, February seasonality is negative, as depicted by the chart below.
Sentiment
NAAIM Exposure index is below December extreme but still high. How many people will still buy stocks? Though, some FOMO is still observable. See more about NAAIM at
Buzz on the Street – Inflation Data Hotter Than Expected
But a 15% chance of a rate hike does not excite me.
Interview for Kerry Lutz’s Podcast
Kerry Lutz, the editor of The Financial Survival Network and The Inflation Cafe’ newsletters. He has interviewed many famous stock market analysts and strategists for his podcast in the last 13 years. This week was my turn. Watch the interview here:
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