close icon

AJG Stock to Lose Half as Post-2009 Uptrend Ends

The pandemic disruptions hardly put a dent in Arthur J. Gallagher’s business. Despite slightly lower revenues, one of the largest insurance brokers in the world achieved its highest profit ever in 2020. As a result, AJG stock climbed to a new all-time high of $129 in December.

Currently hovering around $116, the stock still looks pricey considering earnings growth of 16% over the past four years and a P/E ratio of nearly 28. So, from a valuation standpoint, investors would probably be better off keeping their powder dry for now. Let’s see how the situation looks like from a Elliott Wave perspective.

AJG stock looks pricey

AJG bulls seems to be in even bigger troubles than the stock’s valuation suggested. The weekly chart above reveals that the uptrend from the 2009 low at $14.82 is shaped as a complete five-wave impulse. The pattern is labeled 1-2-3-4-5 and, according to the theory, should be followed by a three-wave correction in the other direction.

The negative phase of the Elliott Wave cycle typically erases the entire progress achieved by the fifth wave. Applying this to AJG stock makes us expect a decline back to the support of wave 4 near $65 a share. If this count is correct, a ~50% drop from the top at $129 seems to have just begun. The bearish RSI divergence between waves 3 and 5 only reinforces our skepticism.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Apple Dips – Opportunity or Something Else?

Apple needs no introduction. It is the biggest, most profitable company in the world and the top holding in Warren Buffett’s Berkshire Hathaway portfolio. And indeed, breaking sales and earnings records quarter after quarter at such a huge scale means Apple really is a great business. But after reaching an all-time high of $145.09 on…

Read More »

Time to Play It Safe in Goldman Sachs Stock

Goldman Sachs is trading at record highs around $330 a share. Increased market volatility helped the bank’s trading division save the day in 2020. Unlike most of its main competitors, GS actually earned a higher profit last year compared to 2019. During the coronavirus selloff, Goldman Sachs stock dipped below $131 a share. Investors who…

Read More »

HZNP Stock Blows Past All Expectations. Now What?

We first covered Horizon Therapeutics, then Horizon Pharma, in September 2016. The stock was trading around $18 a share after a decline from the vicinity of $40. However, we didn’t think it was time to buy. The structure of the preceding rally ending in mid-2015 was impulsive and we thought the bears were not done…

Read More »

AZPN Stock Too Expensive for Its Own Good

Exceptional margins and returns on assets and equity make the surge in Aspen Technology shares easy to understand. AZPN stock exceeded $162 a share last week, up 122% from last year’s low at $73. On the other hand, the software company is expected to earn $5 a share in this fiscal year. This means the…

Read More »

Amerco Stock Carries Very High Risks Above $500

Amerco is a $10B moving and storage operations and insurance provider. The company is founded in 1945 and went public in the mid-1990s. The stock trades under the symbol UHAL and is currently hovering at all-time highs above $500 a share. The recovery from March 2020 was especially rewarding with Amerco stock rising 125% in…

Read More »

Anthem Stock Completes a Pattern it Started in 2001

With a market cap of $72B and 2020 sales of $122B, Anthem Inc. is one of the largest life, hospital and medical insurance providers in the U.S. The company went public in October 2001 and is one of not too many firms never to trade below its IPO price. Nearly twenty years ago, the stock…

Read More »

S&P Global Can Disappoint in Next Couple of Years

In July last year we wrote an Elliott Wave analysis highlighting the possibility of a notable 40%+ correction in Moody’s stock. Seven months later now, the share price is little changed and the negative outlook remains valid. Today, we are going to examine Moody’s major rival – S&P Global Inc. S&P Global is a ratings…

Read More »

More analyses