All the good news around Apple may convince you, that now is the time to invest in the company. This article tells a different story. Investors should definitely read it.
The new iPhone 6 will be launched today. People have been waiting in a queue for days, in order to be the first to buy it. Probably it is going to be a wonderful device, especially if we consider Apple’s reputation. Furthermore, last week Apple stock reached close to $104 per share. These first four sentences seem to provide enough reason for every investor to be highly optimistic about Apple’s future performance on the stock exchange.
Unfortunately, “cloud nine” is rarely a good place to stay, when you make investment decisions. The Market has its own rules and laws, so it is not obliged to follow the above-mentioned logic. That is why we prefer using other methods, such as the Elliott Wave Principle, which, when correctly applied, can give us a hint of where prices are most likely to be headed. According to it, prices move in recognizable patterns, called waves. Five waves in the direction of the larger trend, followed by three waves against it. This means, that if the chart of any financial instrument shows a complete five-wave impulse to the upside, we should expect a three-wave decline. Having that in mind, let’s examine a monthly chart of Apple’s stock prices.
As the chart clearly shows, Apple has been in a strong uptrend for the last 11 years. What is more important is the fact, that this rally consists of five waves. If we apply the Wave Principle, we would come to the conclusion, that this stock may form a major top soon. If this is the correct count, investors should prepare for a reversal to the downside, which could move prices back to the $60 area in the long term. In other words, if you like the new iPhone, it is OK to buy it. But is definitely not OK to buy stocks, just because you like the new iPhone.
Image by www.maxisciences.com
Chart by www.investing.com
