Apple announced their new products and updates yesterday (Tuesday). In Monday's STU we noted that regardless of what was announced, the stock was in the process of tracing out a five-wave decline from its September 7 high. The downside target area that was cited was $146.10-146.59. This morning the stock declined to $146.37, meeting this zone. The range cited is where wave 5 is a Fibonacci 1.618 times wave 1 and where prices meet an internal trendline connecting the lows on July 19, July 28 and August 19, which is shown by the blue dashed line on the chart. An "a-b-c" rally could carry shares to the $150.53-$151.70 range, though the only requirement for a second-wave retracement is that it cannot exceed the start of the prior first wave. When Apple's second wave is complete, the stock will decline to new lows in the third wave of a larger five-wave decline. So, Apple's stock trend has turned bearish.
Apple is part of the NYSE FANG+ Index, an equal-dollar weighted index comprising highly traded growth stocks in the tech industry. The index's members are Tesla, Alphabet (Google), NVIDIA, Netflix, Apple, Facebook, Twitter, Amazon, Baidu and Alibaba Group. A number of these issues are the highest weighted in the S&P 500. The above chart shows a clear five-wave decline in the FANG index from the September 7 high. The index is likely to rally for a few days in an "a-b-c" pattern, retracing a portion of the recent decline. So far, the upward retracement has carried to 7315.97, just a few points from the 7317.31-7320.28 range, where the index will meet the prior wave iv extreme and will retrace a Fibonacci .382 of the selloff from September 7. If prices retrace a Fibonacci .618 of the prior decline, they will carry to 7403.73. Whatever level the "a-b-c" rally terminates, the FANG Index should then start another five-wave decline that draws prices to new lows.
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