S&P 500 is Trying to Peak

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AAPL

• They say, “As Apple Goes, the Market Goes.”

• However, the weekly cycle composite of APPL suggests down into summer and up into the end of the year, which is almost opposite of the cycle composites for S&P 500 and Nasdaq 100 (not shown).

• I think I might have mentioned that Warren Buffett’s Berkshire Hathaway sold about 2/3 of AAPL holdings from Q4’23 to mid-2024.

• Buffett still owns about $75 Billion of APPL, his largest holding. Berkshire Hathaway also owns over $2 Billion in AMZN stock. 

• One of the reasons why Buffett was selling stocks, and APPL in particular, may be overvaluation.

• The chart below shows how extreme the P/S ratio of APPL is.

• I labeled the chart with Elliott wave notation.

• AAPL P/S is completing wave (C) of the labeled (A)-(B)-(C) pattern.

• This wave (C) is a terminal thrust from the triangle (B).

• According to the Elliott Wave Theory (EWT), after completion of (C), APPL’s P/S ratio should revisit the triangle apex, which should be about the average P/S ratio.

• That would represent a significant re-valuation by the factor of about 3.6.

• Will sales increase 3.6 times or price drop 3.6 times? 

• I could be the latter, but it could also be a combination of the two.

• For example, one scenario could be decelerated growth in sales and profits, which could cause investors to re-value APPL stock. Still, sales could continue increasing over time at a slower pace.

Sentiment & Technical Analysis

• The CNN’s Fear & Greed Index is in Neutral territory without guidance.

• The CBOE Skew Index below has achieved at least a 35-year extreme.

• The Skew reflects buying Out-of-the-Money Puts on the stock market index. 

• It is interpreted as “smart money” buying protection against a crash.

• Interestingly, the rising pattern from the 90s forms a diagonal (triangle) pattern, likely completed or nearly so.

• After the diagonal completes, the reversal is typically sharp and retests the origin of the diagonal in short order.

• That presumed Skew low will likely correspond to a market low of significance when the “smart money” closes the Put positions.

BravoCyles on Youtube

• Consider following me on YouTube in addition to the newsletter, as I often post informative videos there. 

  • Warren Buffett has been buying Sirius XM (SIRI) recently while selling APPL and major banks.

  • Watch this short YouTube video for a detailed technical analysis of SIRI.

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