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AAPL curve explained.

June 25, 2013

Apple shares dropped about $300.00 because of psychology, not economics. At $400.00 per share what’s the chance that the price will drop further below the only highly significant support level left on the chart? I think it’s negligible, may be 5% because the support level this time is major and sustainable. However, unfortunately, my prediction depends heavily on psychology and not economics. Why are market forecasting by Bernanke and other key figures in government and the economy are so negative? Is it a Type 2 error or an attitude problem?  I hope these dudes don’t make negative statement anymore, but don’t count on that. Why? Because, again,  of psychology, not economics! You see, the economy is fine but not the economists. Listen carefully to what I have to say because the following statement of fact is so sensitive that I know of  no psychologist that would dare print it on-line. About 80% of the US economists today were PhD trained by the “scarcity model” in economics. They see scarcities all around them. They are motivated by fear. They follow Smith’s rational model that says, “When scarcity meets overspending, austerity measures becomes necessary.” They are pessimists, always driven by an attitude of seeing the glass half empty rather than half full. Greenspan and Bernanke were responsible for big economic and financial downturns because of their attitude, almost responsible for a rare meltdown like in 1929.

However, there is light in the tunnel vision of economists. A century ago there were no optimists in the market place, today may be 20% of the economists are optimists – and they are being hired by Washington and London to spread market optimism. Economists such as Kahneman, Thaler, Sunstein and Krugman are positive thinkers. They don’t follow the “scarcity model,” they follow the “abundance model.” They follow the behavioral model that says, ‘when scarcity meets overspending, stimulus measures become necessary.”

Look at the Apple graph today or tomorrow. If the 80% could keep their mouth shut and the 20% would speak up, AAPL share price would not slide below its beautiful and powerful support level of $385 that is economically far below where that Apple support level should be!

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