“Nokia agreed to buy out Alcatel-Lucent in an all-stock deal that values the French firm at €15.6 billion ($16.6 billion).” – The Wall Street Journal, April 15th, 2015. Apparently, a big deal for both companies, which has been under negotiation since 2013. But what interests us is the behavior of Alcatel-Lucent’s stock price. It does, because we happen to have analyzed it more than a year ago. Do you remember this chart?
It was published on March 5th, 2014, in an article, called “Alcatel-Lucent SA, Big Picture”. As visible, we were expecting wave B down and wave C to the upside. The only reason for these expectations was the wave structure of the decline from 13.80 to 0.70. It was shaped as a five-wave impulse. According to the Elliott Wave Principle, every impulse is followed by a three-wave correction in the opposite direction. In Alcatel’s case, we assumed it was going to be an A-B-C zig-zag with waves B and C still to come. The next chart shows how things went.
As you can see, wave B started almost immediately after the forecast and ended on October 16th, 2014. After its end, it was time for the bulls to show up again for wave C. Which they did. There was no need to know how the negotiations between Nokia and Alcatel-Lucent were going, because the charts told us what to expect more than a year earlier. It is a good example of the Wave Principle’s ability to make accurate long-term predictions for more than just a single wave, without the necessity to follow “real-life” news and events.
Sources: “The Wall Street Journal”