close icon

Elliott Wave Ahead of MCO Stock Bullish Reversal

A month and a half ago, Moody’s was trading below $137 a share, following a decline from as high as $188 in late-July, 2018. MCO stock was down by 27% in just five months and investors were getting overly pessimistic about its investment merits.

But instead of simply extrapolating the recent weakness into the future, we decided to examine MCO stock through an Elliott Wave perspective. The chart below, published in an article on December 21st, summed up our findings.

Moody's stock Elliott Wave price chart

Moody’s’ 4-hour chart revealed that a perfect impulsive decline has been in progress since the high of $188. The Elliott Wave theory postulates that a three-wave correction in the opposite direction follows every impulse pattern. Hence, instead of joining the bears, we though MCO stock was poised for a bullish reversal near $130.

In addition, the MACD indicator revealed a bullish divergence between waves 3 and 5 of A. The anticipated recovery was supposed to reach the resistance area of wave 4 near $160, since there were no other major obstacles prior to this level.

MCO Stock Elliott Wave Update

Last week, MCO stock closed at $161.27, so it is time to take another look at the situation on the updated chart below.

MCO stock Elliott Wave forecast

So far so good. The Wave principle successfully warned us about a price reversal, just when the situation was looking the bleakest. However, the recovery from $129 to $161 doesn’t look corrective. It appears to be another five-wave sequence, labeled i-ii-iii-iv-v in wave “a”.

This means wave B is not over yet and wave “c” can be expected to lift MCO stock to the area between the 61.8% and 78.6% Fibonacci ratios. But first, a three-wave pullback in wave “b” of B should drag the price down to roughly $145 a share.

If this count is correct, wave B should terminate in the $165 – $175 price zone. Once there, the 5-3 wave cycle would be complete and wave C down should follow. The long-term prediction for MCO stock trading below $100 remains viable, as long as $188 holds.

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover the patterns yourself!



Stay informed with our newsletter

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

Privacy policy
You may also like:

GTX Stock May Recover, but Remains Under Pressure

With a market cap of just over $1B, Garrett Motion Inc. is still considered a small company. Founded less than two years ago in Rolle, Switzerland, the company provides electric-boosting technologies for light and commercial vehicle manufacturers. In September 2018, GTX stock started trading on the NYSE. It was hovering in the vicinity of $20…

Read More »

Lockheed Setting the Stage for an Unpleasant Surprise

Lockheed Martin has been one of the best companies to own during the last ten years. The Great Recession dragged the stock down to $57.41. Once again, the point of maximum pessimism turned out to be the best time to buy. Two days ago, LMT closed at a new all-time high of $370.38 a share.…

Read More »

CVI Stock Keeps the Elliott Wave Rally Alive

The first time we wrote about CVR Energy was in September 2016. CVI stock was hovering below $15 a share at the time, following a crash from as high as $72 in 2013. Despite the terrible three years the bulls had to suffer through, our Elliott Wave analysis of CVI stock ‘s weekly chart convinced…

Read More »

WD Stock Gets Vulnerable Near All-Time Highs

Walker & Dunlop Inc. provides financing services to owners of commercial real estate from its 29 offices in the U.S. Valued at just $1.6 billion, the company is a hardly a mainstream name. WD stock has an average daily volume of less than 170 thousand shares. Apparently that is still enough for Elliott Wave patterns…

Read More »

CHKP Stock Can Ruin a Buy-the-Dip Strategy

Check Point Software Technologies is among the global leaders in the field of cyber security. The company was founded in 1993 and is headquartered in Tel Aviv, Israel, but CHKP stock trades on the NASDAQ since 1996. CHKP went though the dot-com bubble and burst in 1999-2002. Its stock price didn’t fully recover from it…

Read More »

Can Facebook ‘s Privacy Concerns Fulfill this Setup?

Facebook ‘s privacy policies are under the microscope once again. Personal e-mails uncovered during an FTC investigation reveal Mark Zuckerberg knew of the company’s problematic privacy practices. Facebook stock still hasn’t been able to fully recover from the crash in the second half of 2018, which dragged the price from $218.62 down to $123.02. How…

Read More »

JPMorgan: Risk is High After 10 Years of Bull Market

Between March 2000 and March 2009, JPMorgan Chase & Co. investors saw their holdings’ value decline by almost 78% as the stock fell from over $67 to less than $15 a share. The next ten years, on the other hand, have been a wonder to behold. JPM stock rose like a phoenix from its ashes,…

Read More »

More analyses