U.S. Government Suit Against Apple Forewarns of Global Equity Top

GAINESVILLE, Ga., March 9, 2012 /PRNewswire/ -- When the U.S. government attacks the most successful corporation of the times, it signals that the rising trend in the stock market is near its end and a major bear market waits just around the corner. This time, Apple Inc. will play the fall guy.

That's the thesis advanced in a new study by Mark Galasiewski, a researcher at Elliott Wave International (EWI) and the Socionomics Institute, both of Gainesville, Georgia, in the March 2012 issue of EWI's Global Market Perspective.

Galasiewski's analysis of Apple follows up on a study conducted in May 2000 at the height of the U.S. government's antitrust action against Microsoft Corporation. That study, done by the Institute's executive director, Robert Prechter, found that:

The government's antitrust suits against U.S. corporations, particularly the landmarks suits that make the history books, consistently come near stock market peaks, usually slightly afterward.

Prechter's study showed that the U.S. government attacked Standard Oil ahead of the Panic of 1907; RCA ahead of the 1930-1932 stock market collapse that led to the Great Depression; and IBM one month after the 1969 top in the DJIA. The May 2000 study also correctly predicted that the U.S. court decision against Microsoft in April 2000 bode ill for equities. World stock markets declined for the next two and a half years.

Global Market Perspective's March 2012 study, which was published on March 2, predicted that similar antitrust action against Apple would come near a major top in both Apple's share price and the global stock market rally of the past three years. The announcement on March 7 by the Justice Department that it plans to sue Apple and five e-book publishers for price-fixing sets the stage to fulfill the first half of that forecast.

If past precedent holds, a court decision against Apple and its partners should signal the start of a major bear market in global equities, fulfilling the second half of EWI's forecast.

A copy of the special report can be found at http://www.elliottwave.com/club/pdf/1203AFF_Apple_GMP.pdf. To arrange an interview with the author of the report, contact Alexandra Lienhard, 770-536-0309 at [email protected].

SOURCE Elliott Wave International