close icon

Burlington Bears Returned with a Vengeance

Along with airlines and travel, retail has been among the industries hit the hardest by the coronavirus epidemic. Social distancing policies to contain the spread of the disease resulted in mall and store closures around the world. Burlington Stores is one of many victims.

BURL stock exceeded $250 a share in mid-February 2020. A month later, it dipped below $106, down 58% in just one month. And while no-one could’ve predicted the virus outbreak, the crash it caused made a lot of Elliott Wave sense. The chart below, published almost a year ago, on April 13th 2019, explains.

Burlington stock was supposed to decline even without the coronavirus

Burlington’s daily chart revealed that the post-2013 uptrend looked like an almost complete five-wave impulse. Waves (1) through (4) were already in place, which meant one last surge in wave (5) can be expected. The $200 mark seemed like a reasonable target at the time.

Burlington Bears Punish Complacent Bulls

On the other hand, the theory states that every impulse is followed by a correction. So, instead of letting complacency set it after 6 years of gains, we thought investors should proceed with great caution. Extrapolating the recent past into the future is extremely dangerous at all times. Even more so if a fifth wave is in progress.

Burlington stock crashes as COVID-19 takes a toll

Burlington bulls exceeded $200 and went for $250, making us feel like dummies for a while. However, the larger size of wave (5) didn’t change the wave structure. Trees don’t grow to the sky and trends don’t last forever. Missing out on the last 25% of the rally was much better than suffering the 58% collapse that followed.

Now, the 61.8% Fibonacci level has been reached. This tells us that most of the crash is most likely behind us already. The selloff looks like a single move in wave (a), so another drop in wave (c) seems likely. However, the bullish 5-3 wave cycle is nearly complete. Burlington ‘s uptrend can be expected to resume from the $100 – $90 a share support area.

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:

Alphabet Stock To $1700 and… Below?

Similarly to the market at large, Alphabet stock felt the tremors caused by the coronavirus panic. The Google parent’s share price fell from $1531 to $1009 between February 19th and March 23rd. One of the biggest and strongest companies in the world lost 34% of its value in a little over a month. However, thanks…

Read More »

Sidestepping the 55% Crash in Steel Dynamics Stock

It’s been a little over four months since we wrote about Steel Dynamics. On January 16th, the stock was hovering around $33 a share. The price was down 37% from its May 2018 peak at $52.10. Yet, despite the reduced price, we thought investors would be better off avoiding the name. Our bearish opinion was…

Read More »

Omnicom Bears Face Strong Fibonacci Support

Yesterday, we talked about Interpublic and how Elliott Wave analysis warned us about its stock’s collapse two years in advance. Today, we are going to focus on Omnicom, which looked vulnerable to us in March 2018, as well. Omnicom rose from $20.09 to $89.66 between March 2009 and December 2016. The stock took full advantage…

Read More »

Two Years Ahead of Interpublic ‘s 55% Collapse

Interpublic and Omnicom used to be the giants of the advertising world. In the old economy, their competitive advantages seemed indestructible. Then, the Internet revolution came along and Facebook and Google created a lot of problems. However, their stocks were still making new highs until two years ago. Interpublic stock, for instance, was hovering around…

Read More »

Nestle Set to Complete a Pattern it Started in 2003

Nestle S.A. is one of the largest companies in the world and the biggest food and drink producer by revenue. The company is headquartered in Switzerland and went public in 2001. The stock’s all-time low was reached in March 2003, when it fell to CHF 23.32 a share. Seventeen years later now, Nestle stock is…

Read More »

Bulls to Lift Mondi Stock to New Highs

We first wrote about Mondi plc, the paper and packaging company, almost a year ago. On May 5th, 2019, the stock was hovering above 1700 pence per share. Despite being down 25% from its all-time high already, we thought it was too early for investors to buy the dip. Our pessimism was based not on…

Read More »

Rapid7 ‘s Rapid Decline Plants the Seeds of a Rally

Eight months ago we made a case that Rapid7 investors should not expect the future to resemble the past. The stock was up 492% since February 2016 and was hovering above $53.50 in August, 2019. Without a doubt, the cyber-security industry was and still is enjoying a strong tailwind. However, Rapid7’s daily chart revealed a…

Read More »

More analyses