2018 is nothing like 2017 so far for 3M stock investors. The share price reached an all-time high of $259.77 on January 26th, but has been steadily declining in the past five months, losing over 26% at one point in May. If you have been following us for at least two years, you probably know we are long-term bearish 3M stock, not because the company is inherently weak, but because the five-wave impulse pattern, which has been in progress since the early 1970s, seems to be complete now. According to this article, published in January 2017, the recent weakness represents the beginning of a large bear market for MMM stock.
Investors, who are still on the long side must be looking for a way to contain the damage and evacuate at a better price. The chart below shows that they might get the chance to do so if they wait a while.
The 4-hour chart of 3M stock shows that even though the recent plunge cannot be seen as a complete five-wave impulse yet, it is very likely to evolve into one soon. The bearish reversal will be confirmed the moment wave (5) breaches the bottom of wave (3). It is interesting to notice that wave A/I has been developing between the parallel lines of a trend channel, while the five sub-waves of wave (3) form a trend channel of their own.
If this count is correct, we are about to see a false bearish breakout soon. False, because according to the Elliott Wave Principle, every impulse is followed by a three-wave correction in the opposite direction. This means that instead of joining the bears when wave (5) makes a new low, traders should be getting ready for a notable recovery in wave B/II towards $220. In addition, the RSI indicator seems to be forming a bullish divergence already, thus supporting the short-term positive outlook. In our opinion, investors should see the anticipated recovery as their last chance to get out before the bears return to drag 3M stock much lower in wave C/III.