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Apple, Inc. Announces $10B Share Buyback Program -- Bullish for AAPL?
Investors see corporate stock-repurchase programs as bullish. Are they?

By Vadim Pokhlebkin
Mon, 19 Mar 2012 17:00:00 ET
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On March 19, Apple announced that starting in 2013, it will spend $10 billion of its immense cash reserve to buy back its own shares.

Investors view stock-repurchase programs as bullish. Indeed, how can it not be when the firm whose latest rally contributed 1/3 to the NASDAQ's gains this year says it will "support" its own stock?
 
The logic seems sound. But read these two quotes -- from Barron's and The Wall Street Journal -- as reported on by our own monthly Elliott Wave Financial Forecast:
 
"'Beware the buyback,' reported Barron's over a story about a new study by Rockdale Research. 'The most unexpected thing, but in retrospect it made total sense, was that corporations tend to buy back stocks at peaks, not troughs.' The Elliott Wave Theorist made the same observation in 1995...noting, 'Company officers are part of the market’s psychological fabric just like everyone else, and they tend to become bold when things look good...'"
-- June 2005 Elliott Wave Financial Forecast
 
"The Wall Street Journal points out that General Electric bought back $29 billion dollars of its own stock at an average price of $36 a share. It’s now trading at about $20 a share. Lehman is now becoming infamous for investing $4 billion in its own stock a few months before it went under..."
-- October 2008 Elliott Wave Financial Forecast
 
You will find our latest comment on AAPL -- complete with a chart and put/call ratio analysis -- online now in the March 16 issue of our Monday-Wednesday-Friday Short Term Update. 


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