Fans of “Elliott Wave” theory take note: The Elliott Wave International group has been warning ominously in the last week or so that “government bureaucrats” might find a way to take away the bunch bowl from the amazing run-up in Apple (AAPL) shares, which are up 35% this year, and 55% in the last 12 months.
Over the transom this morning comes a missive from Elliott Wave researcher Mark Galasiewski, who writes that a warning by the U.S. Department of Justice to Apple earlier this week that it plans to sue Apple and five U.S. publishers has echoes of former anti-trust deals that cut short the growth of former high-flying stocks.
Writes Galasiewski, the action “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.”
Galaswiewski sees a parallel to the DoJ suit against Microsoft (MSFT) on anti-trust grounds in 2000. And he cites the work of Elliott Wave guru Robert Prechter:
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.
Stock markets declined afterward for two and a half years, Galaswiewski observes.
Similar precedents, the group believes, are the suit against Standard Oil in 1907, “ahead of the panic” of that year; the suit against RCA that precipitated the Great Depression; and the suit against IBM (IBM) “one month after the 1969 top in the Dow Jones Industrial Average.”
“If past precedent holds, a court decision against Apple and its partners should signal the start of a major bear market in global equities,” writes Galaswiewski
Apple shares today are up $3.56, or 0.7%, at $545.55.