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:

Procter & Gamble Stock Approaching Heavy Resistance

The lower the price paid the higher the return. This is a simple truth all stock market investors should keep in mind all the time. Yet, few really do. Procter & Gamble, for example, is the same strong company it was last year and the year before. Depending on the price you paid for its…

Read More »

Ralph Lauren Stock Set for a 50% Gain?

Ralph Lauren, the maker of Polo, is another top apparel brand, which was left for dead during the “retail apocalypse” of 2017. In just four years between May 2013 and May 2017, the company lost over 65% in market value as the stock fell from an all-time high of $192 to as low as $66.…

Read More »

Etsy Stock: The Easy Money’s Been Made Already

Three years ago, in January 2016, Etsy stock fell to as low as $6.04 a share. Yesterday, it closed at $54.59 a share. If you have been among the lucky few, who happened to pick the bottom and held until now, your annual compounded rate of return would be over 108% per year or 803%…

Read More »

Bank of America Riding the Earnings Wave… For Now.

The last time we wrote about Bank of America was on October 18th, 2018. The stock was trading below $29 a share, down from the $33.05 top reached in March. The bank had just reported a record first quarter, but the stock price was falling nevertheless. So in order to make sense of it, we…

Read More »

Boeing Stock Ready for a Final Ascent

The last time we wrote about Boeing stock was in early October 2018. In that article we shared our view that while BA was approaching the $400 a share mark, it was time for the bulls to play it safe. The Elliott Wave principle suggested that a bearish reversal can soon be expected, even if…

Read More »

Home Capital: From near Bankruptcy to Opportunity

Home Capital Survived in 2017 Home Capital investors had a volatile two years. The company almost went bankrupt in mid-2017. Allegations from the Ontario Securities Commission that management misled investors about mortgage fraud within its broker network led to a run on the bank. 95% of its saving accounts deposits disappeared as a result. On…

Read More »

Nvidia Stock Staging a Deceptive Elliott Wave Recovery

The last three months of 2018 may have been bad for stock market investors in general, but few suffered more than NVDA shareholders. Nvidia stock climbed to an all-time high of $292.76 a share on October 2nd. By December 24th it was down to $124.50, losing over 57% in less than 90 days. So it…

Read More »

More analyses