Apple Crumbles!
Yes folks, 2014 is going to be a very different year from what we have been used to. The Great Central Bank Reflation has kept the balls in the air for a few years, but this year is the Year of Reckoning. All kinds of assumptions will be turned on their head – and the omnipotent power of APPLE is just one of them.
I have mentioned that trader sentiment had reached off-the-scale bullishness at the end of 2013 – and this is entirely in keeping with the nature of the rally off the 2009 lows which I label as a very large B wave.
And starting on 2 January, the C wave has just got under way. This wave will draw prices to under the A wave low, so we have a lot to go for.
The decline to under the a wave low at 6,500 will be steeper than the ascent and should be over in 2-3 years. That is my timetable. When the C wave ends, that will be the time to fill your boots with assets – all of which will be offered at fire sale prices from houses to gold to shares to art – even to Damien Hurst’s pickled animals (if that takes your fancy). But we must pass through the Slough of Despond first – a deflationary depression.
In the meantime, this may be the last great time to cash out of assets, especially equities before the C wave really gets under way. I foresee a time when many assets will attract no or just low-ball bids.
In late December, I forecast that the excellent US economic data would soon turn sour and today’s Durable Goods was a real shocker – down 4.3% in December vs a 1.6% consensus increase. That’s what I call a big miss! But here’s the point: the stock market wasn’t fazed! That was because it had already telegraphed poor results with the big drop in the last few days.
Yes, it is the stock market that drives the economy. Most people put it the wrong way around. Show me a Dow chart and I’ll tell you where the economy is going to be.
APPLE
The main session has just opened and this is the damage:
The open is 10% down and this has all the hallmarks of a breakaway gap (I have been covering this chart pattern in my MW Trader emails). I expect at least some of the gap to be filled soon, but this is the bear market in Apple re-asserting off the $700 all-time high.
Recall my long-term target is at least the $400 level with much lower quotes thereafter.
