In 1940s, Edward R. Dewey hypothesized, that the tallest buildings are usually completed after significant market peaks. Now, 74 years later, this hypothesis is a good addition to the socionomic theory. The new science of Socionomics, founded by Robert Prechter Jr. in 1979, postulates that social mood drives financial, macroeconomic, political and social behavior, in contrast to the conventional understanding that such events drive social mood. The best tool to register social mood is the market through its charts. Optimistic and happy people buy, while pessimistic, angry or afraid people sell. So each chart is nothing more, than an illustration of the psychological condition of the masses at any given moment. In the Market, extreme optimism results in price bubbles. One of the real-life manifestations of extremely positive social mood is the construction of enormous buildings. But what does Apple have to do with this?
In April 2006, Steve Jobs announced, that Apple is going to expand to a new building, called Apple Campus 2. With grounds of 710 000 square meters and 280 000 square meters floor area, the project could easily fit into the “enormous building” description. Also known as “the Spaceship”, Campus 2 is expected to open doors in the middle of 2016.
In order to fulfill the socionomic pattern of a new large building being completed after a major market top, the stock of Apple Inc., currently in an uptrend, has to be approaching the point of reversal. Is this so?
Among the things you will find in the recommended material above is the following monthly chart of Apple’s stock prices. It shows, that according to the Elliott Wave Principle, Apple may be at the end of an uptrend, which lasted more than a decade.
As you can see, there is a very clear five-wave impulse on this chart. The Principle states, that after every five waves there is a three-wave correction in the opposite direction. In other words, Apple is expected to reverse to the downside for a significant decline. So, what do we have here? The biggest company in the world, whose shares may fall after many years of growth, investing in a huge new building. Do you see the pattern?
Steve Jobs image by www.boomsbeat.com
Campus 2 image by www.cnet.com
Chart by www.investing.com