Ernie, I believe your target of $1600 may be many years from now. If you look at the Elliott waves since Apple’s IPO in December 1980, the top in September 2012 was likely the end of a wave 3 that started in December 1997.
Below are five links to some charts that a have uploaded with my Elliott wave count for Apple. Please look at them and have them at hand before reading further. To get the full size of the images just click on them. The data is taken from Google Finance.
Chart I
Chart II
Chart III
Chart IV
Chart V
When blue wave 2 ended in December 1997, AAPL completed a correction that had lasted for 6 years and 8 months. The correction did not make a new high, and was double zig-zag. This information is important when trying to forecast blue wave 4.
Blue wave 3 clearly subdivides into 5 waves (red wave 1, 2, 3, 4 and 5). Blue wave 3 adheres to several Elliott wave guidelines. First of all the personality of the wave is the personality of a wave 3, a rise in price from $3.19 to $705.07 in about 15 years. The internal subdivisions of blue wave 3 also adhere to common Fibonacci guidelines. Red wave 3 is 2.618 times red wave 1 (the second most common relationship between wave 1 and wave 3), and red wave 5 is about 0.618 times wave 1 (it is common that wave 1 and wave 5 are related by the golden ratio).
Also an almost perfect Elliott wave channel can be produced by connecting the ends of red wave 2 and red wave 4 of blue wave 3. It is interesting to see that we are now trading below this channel.
So, IF this is the correct Elliott wave interpretation of AAPL, what lies ahead in the coming years? Since blue wave 2 did not make a new high and was of the simple kind, the guide line of alternation suggests that blue wave 4 should be a complex correction making a new high in the process. There are many possible scenarios for this of course, but I have created two, an expanded flat correction scenario and a running triangle scenario, both making new highs during its time of travel. Since blue wave 2 lasted for 6 years and 8 months, blue wave 4 should take about the same amount of time. It is quite likely that it will take longer, since it is of a sideways nature. The scenarios I have drawn on the charts are not correct time wise. I drew them big just to make it easy to see.
So how long should AAPL fall according to these scenarios? The guide line suggests that blue wave 4 should at some point trade within the price territory of red wave 4 of blue wave 3. The price range for this is between $203 and $78. It is more likely that AAPL will reach the lower end of this range, say $90-$100.
Does the Nasdaq 100 index itself support the idea of an AAPL correction of this magnitude? I believe it does. The final link shows what I believe it the correct interpretation of the price movement since the top of 2000. We are now at a juncture where the internal waves of the correction since October 2002 fulfill a common relationship for corrective waves, i.e. equality.
This is why I believe that the $1600 projection for AAPL lies many years ahead.
As always, a forecast is just a forecast. The AAPL stock might do whatever it wants, and you might very well be right with your call.
Regards
Fredrik
