The antitrust suit that the Justice Department threatened Apple with on March 7 may bear a wider significance for overall market trends. According to one recent study, U.S. government attacks on highly successful corporations historically correlate to stock market peaks. Major antitrust suits generally come just after the decline into a bear market. Growing negativity toward Apple in the social mood suggests we might be looking at the end of the most recent global stock rally.
So finds study author Mark Galasiewski, a researcher at Elliott Wave International (EWI) and the Socionomics Institute, both of Gainesville, Georgia. In Apple, Inc. -- It's Ripe For the Picking, Galasiewski points out rising popular backlash against Apple, the increasing susceptibility of Apple products to hacking attacks, derisive comments from Teamster President Jim Hoffa, and a 191-page FBI dossier detailing the "meanness" of the late Steve Jobs, as evidence of public negativity toward the corporation.
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, traced the history of correlation between antitrust suits and market downturns. It 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.
Prechter's study also correctly predicted that the U.S. court decision against Microsoft in April 2000 would bode ill for equities. World stock markets declined for the next two and a half years.
Apple does not dominate its various markets as much as Microsoft, IBM, RCA and Standard Oil did when they attracted antitrust suits," observes the study. But it's nevertheless the "world's largest technology company by revenue and profit, and the world's largest company in terms of its market capitalization, which exceeded half a trillion dollars this week."
There are a lot of "ifs" involved. But if the correlation between lawsuits and markets continues and if a federal judge hands down a decision against Apple and its partners soon, watch out for peaks, and downturns, and bears. Oh my.
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