close icon

Barratt Stock Decline Not a Buy-the-Dip Opportunity

Barratt Developments PLC is the largest house-builder in Great Britain. Founded in 1958, the company acquires land and plans, designs, constructs, develops and sells homes in the United Kingdom. Similarly to many home-building companies, Barratt had a tough time during the housing crisis. The stock, which trades under the ticker symbol BDEV on the London Stock Exchange, got totally destroyed between February 2007 and July 2008, losing over 97% of its market cap following a crash from 859 GBp (penny sterling or pence) to as low as 22.8 GBp.

Fortunately, Barratt survived. Being conservatively financed definitely helped and as of this writing the stock is trading at 521 pence after a decline from 705 in October, 2017. In order to find out if this pullback represents a buying opportunity or the beginning of a bigger correction, we will take a look at the weekly chart of Barratt stock through the prism of the Elliott Wave Principle. The shape of the recovery we saw in the last decade does not look very promising for the next few years.
barratt stock elliott wave analysis
The bull market from 22.8 to 705 took over nine years and developed as a textbook five-wave impulse, labeled (1)-(2)-(3)-(4)-(5). On the bright side, this pattern means Barratt stock is likely going to reach a new all-time high once the uptrend resumes. The problem is that according to the theory, every impulse is followed by a three-wave retracement, which usually erases all the gains achieved by the fifth wave of the pattern.

In addition, the recent weakness from 705 GBp also looks like a five-wave sequence, confirming the bearish outlook. If this count is correct, a large degree simple (a)-(b)-(c) zigzag correction is in progress. Wave (b) might be able to lift Barratt stock to the 600 pence mark, but as long as the top of wave (5) holds, another selloff in wave (c) should be expected. The support of wave (4) near 330 GBp looks like a reasonable bearish target.

We cannot tell if this chart means the entire housing market in the UK is entering the negative phase of the business cycle again. It only suggests buying the dip in Barratt stock is not the best idea one can come up with right now.

Did you like this analysis? Learn to do it yourself with our eBook Elliott Wave guide!



Stay informed with our newsletter

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

Privacy policy
You may also like:

MongoDB – Bearish Pattern Joins Nosebleed Valuation

MongoDB Inc. is a general purpose database platform developer and provider. The company was founded in 2007, but only came public ten years later – in 2017. During the following four years, the stock has risen from an IPO price of $33 to $515 a share as of last week. So, it is fair to…

Read More »

Pandora Does Things Right. Stock May Need a Breather

When we wrote our previous article on Danish jewelry maker Pandora in December, 2020, the stock was up over three-fold since March. That recovery from DKK 180 to DKK 651 didn’t not come out of the blue, though. It was the result of a bullish setup we managed to identify as early as July 2019.…

Read More »

Match ‘s SP500 Inclusion a Good Excuse to Reach $200

Match Group Inc. rose over 10% in post-market trading Friday following reports that it is going to be included in the S&P 500. The company, which owns Tinder, OkCupid and most other major dating apps in the U.S., has a market cap of over $41B. Despite the anticipated “summer of love”, though, this is not…

Read More »

Cameco Stock Seems to Have Finally Turned a Corner

Uranium spot prices are on the verge of breaking above $34/lb, up over 80% from the bottom of $18/lb reached in late-2016. Cameco, as one of the world’s top uranium producers, is now seeing its stock price rising in tandem. Yesterday, it closed at $19.16 after reaching $21.95 in June. We first covered Cameco in…

Read More »

A Fresh Look At Cigna ‘s Elliott Wave Super Cycle

In a case study article on Cigna, published in October, 2016, we examined how a fundamentally sound and undervalued stock can still drop nearly 90%. The reason for that crash didn’t lie in some company specific issue. Rather it happened to occur during the biggest financial crisis in 80 years. Nevertheless, we made the point…

Read More »

CBOE Takeover Rumor Lifts Stock to Elliott Wave Target

We first wrote about CBOE Global Markets less than eight months ago. The S&P 500 had already recouped all its COVID selloff losses and was hovering at new all-time highs. CBOE, in contrast, was still down 30% from its 2018 record, trading below $97 a share. For some reason, the market was ignoring the company’s…

Read More »

Ahead of Ulta Beauty ‘s 150% Gain Since Lockdown

Buying shares in a beauty retailer in March 2020 sounded like a crazy, stupid idea. Stock markets around the world were plunging at a record pace amid a global GDP crash resulting from government-enforced lockdowns. People were stockpiling necessities in preparations not to leave their homes in the foreseeable future. With COVID-19 cases rising everywhere,…

Read More »

More analyses