AAPL’s $3 Trillion in View: But This Story is About Looking Back
Apple stock goes from souring to soaring in 2023. Elliott wave analysis meets the “need” for clarity.
by Nico Isaac
Updated: May 23, 2023
I was recently thinking about the famous model of human psychology, Maslow's Hierarchy of Needs. Yes, this is the typical way I spend my Saturdays!
The model is intricate, but pared down, it purports that human beings require a multi-tiered foundation of physical safety, financial security, and emotional support and intimacy in order to thrive. These tiers buttress each other, like a cheerleading pyramid, lifting the person higher and higher until they realize their greatest potential.
So, what about investors? What is their success built on?
The mainstream financial model isn't so much a pyramid as it is a brick. It's primarily made up of one tier, the "market fundamentals" block on which a market's price trend is driven by external catalysts. Seek the news surrounding a market and there you shall find the event (s) that will propel prices up, down, or sideways.
A prime example of this model comes from Nasdaq kingpin and world's biggest company by market cap, Apple Inc. (AAPL). Last December, and early this January, AAPL stock had plummeted more than 25%, suffering rating downgrades and circling the drain of an 18-month low.
2022 was AAPL's worst annual showing since the 2008 financial crisis.
And, according to the mainstream's hierarchy of news, Apple Inc. was there for bears to meet their highest potential. On January 4, Bloomberg wrote:
"Apple's Stock Is Losing Its Shine After an Ugly Month of December.
"Until recently, shares of the world's most valuable company defied much of the gloom that walloped other tech giants in 2022... With its valuation still above its average over the past decade, there's plenty of room to fall."
This is "fundamental" market analysis at its core. It's a one-directional relationship with markets. In Maslow's view, it has several "deficits" that disable investors from seeing beyond current price action and extending the latest trend forward.
And instead of falling further, AAPL turned itself around in 2023, soaring to one-plus year highs this May in what Yahoo Finance called on May 22, "a relentless rally that puts $3 trillion in view."
Forget about the pompoms. We at Elliott Wave International aren't cheerleaders. But we do have a stable pyramid from which to build a strong forecasting foundation. It goes like this:
The base: Price trends are driven by investor psychology, which unfolds as Elliott wave patterns directly on price charts.
Tier 2: Ask yourself: Do you recognize 1 of the 5 core Elliott wave patterns on the price charts of the markets you're following? If yes, proceed to the next level.
Tier 3: Does the pattern adhere to its clearly defined rules and guidelines? If yes, proceed to the next level.
Tier 4: Has price action confirmed your wave count? If yes, proceed to the next level.
Tier 5: Identify clear levels of resistance and support in order to minimize risk and establish a high-confidence trade set-up.
Tier 6: Initiate the trade.
Returning to Apple Inc., we see how this Elliott wave hierarchy of needs helped establish a solid base for which traders were able to anticipate the stock's biggest turns. On December 7, our Trader's Classroom outlined a broad, bearish trajectory for AAPL that would take prices down into a specific price window of 109.14-122.25 to complete a wave (4) correction -- in preparation for a bullish takeoff. From Trader's Classroom:
"If Apple does indeed break down as this count calls for, we can probably expect a bottom somewhere within this range. That gives us an area to look for."
From there, AAPL indeed closed out December in a powerful downtrend, landing into a low on January 4, which likely completed the bearish leg of the Elliott wave pattern.
Then, on January 9, Trader's Classroom revisited AAPL with an updated wave count. There, editor Robert Kelley called for further decline in wave (4). However, he also presented key and critical price levels to watch that, if breached, would signal the alternate, bullish count was in play. From Trader's Classroom:
"When I'm in a trade, I'm always asking where I am potentially wrong. What other counts could be in play that would be counter to what I'm expecting. And where would that alternate count gain significant credibility to where I want to alter my position.
"The level I would no longer be confident of further decline in Apple is if it goes above 140.70. [That would suggest] the bullish alternate is probably the case and Apple is ready to take off."
AAPL did continue higher, pushing through Robert's resistance level to confirm the trend had turned up. The stock continued to rally, reaching an 8-month high in mid-April. Then on April 4, Trader's Classroom confirmed the stock's uptrends was still intact and said:
"I would be bullish on Apple while the 161.51 level holds. If this count is right, it's going to keep going up. One thing I've learned is when a market is going your way, that's not the time to call the preferred count that's working into question. You still want to go with it, and that's what I'd like to do here."
And from there, AAPL continued to rally, meeting one-plus year highs in May. This final chart captures the full extent of Apple's 2023 comeback thus far:
As for where some of the world's leading stocks are headed now, Trader's Classroom builds its multi-tiered foundation of labeled price charts, detailed analysis, and live video lessons today.
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