Since the top in mid-September 2012 when Apple topped out at 705.07 a decline to 385.10 was seen by mid-April 2013 and since then Apple has regained almost all of the lost ground, but is Apple a buy again here?
To figure out where we are in the larger picture, we will have to go back to March 2000, when Apple peaked at 37.59, I have marked this high as wave (1) and the following wave (2) decline corrected almost all of wave (1) and ended in April 2003 at 4.83, from where wave (3) took off.
When we look at wave (3) we can count a nice five wave rally, with some nice wave relationships. Let's take them one at the time. Wave 1 rallied from 4.83 to 202.96 and was followed by 61.8% corrective decline in wave 2 to 78.20 (the ideal 61.8% corrective target would have been at 80.51). Wave 3 became almost perfectly 161.8% * wave 1 with the high at 404.50 (the ideal target would have been at 399.13). Wave 4 was expected to be a shallow correction as wave 2 corrected most of wave 1 (remember Elliott principle of alternation between wave 2 and 4). However, wave 4 only corrected 14.6% of wave 3, which is an unusual small correction and was a warning, that the final wave 5 would like be strong. As wave 2 was a simple zig-zag correction wave 4 should be either a flat of a triangle and it became a triangle (although a very small one). Wave 4 ended at 380.48 and the stage for wave 5 was set. Wave 5 did become a powerful wave and ended at 705.07 just below the equality target with wave 3. R.N. Elliott did state, that during a five wave rally two of the waves tend to be equal in length.
Then we are back to the correction from 705.07 and whether Apple is a buy here? I will say no. Wave (2) was a deep zig-zag correction and due to Elliott's alternation principle we should expect wave (4) to be a flat or a triangle consolidation. The decline from 705.07 to 385.10 was clearly a zig-zag correction and the rally of the 385.10 has been a overlapping non-trending double zig-zag rally. The zig-zag structure could imply that a triangle is unfolding and in this case we should expect resistance here at the 81.6% at 644.02 corrective target ideally will protect the upside for a decline towards 446.
However, at this point we can't disregard the possibility of an flat correction unfolding. If a flat correction is unfolding, then we still could see a move slightly higher close to the former top at 705.07 before turning lower in wave C of (4).
In case of a flat correction, Apple at best could make a 10% profit, but the risk is much larger and I don't think this risk is worth taking at this point.
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