AMN Healthcare is the largest healthcare staffing in the United States. It recruits healthcare professionals and places them in different working positions in the field of healthcare.
AMN Healthcare Services Inc. investors saw its stock price changing for the better during the last five years. In October 2011 it fell to as low as $3.60. In August 2016, shares were already hovering around 45.00 dollars. While the stock is currently trading slightly above $36 a share, investors, impressed with AMN’s past performance, are probably eager to buy the dip now.
Well, in our opinion, this is not a good idea. Let’s explain why by starting with the 30-minute chart of AMN Healthcare stock, which is going to show us the most recent decline from $45 to $33.77.
The Elliott Wave Principle is market forecasting method, based on price pattern recognition. It states that five-wave sequences, called impulses, show the direction of the larger trend. Among its other rules is that every impulse is followed by a three-wave correction in the opposite direction. Take a look at the chart above again. As visible, AMN stock fell in five waves, labeled 1-2-3-4-5. The sub-waves of wave 3 are also clear. This means the stock’s trend is now pointing down, at least in the short term. The 30-minute chart also suggests the recovery from $33.77 is just a temporary correction in wave (b), before wave (c) takes the price even lower. How low? We need to take a look at the bigger picture, in order to find the answer.
Due to the fractal nature of the markets, the same patterns can be found on all degrees of trend. The weekly chart makes the entire development since 2011 visible. It shows that the bull trend we witnessed in the last five years is another impulse. Putting all pieces of the puzzle together, it turns out AMN Healthcare stock is in a long term uptrend, but it has to go through the negative phase of the 5-3 cycle, before the bulls return. The weekly chart puts things into perspective and allows us to see that wave (c) could be expected to cause a plunge to the price area between $25 and $20, where the support of wave (4) of the impulse is likely to prevent AMN Healthcare from falling further. So, instead of buying the dip now, we believe investors should prepare to see AMN Healthcare stock down by another $11 to $16, before the next low-risk buying opportunity emerges.
