close icon

EssilorLuxottica Lost 40%. Is It a Buy Now?

When we last wrote about EssilorLuxottica, the stock was at all-time highs. COVID-19 was still thought to be just a Chinese problem and nobody could’ve predicted the damage it would inflict on the rest of the world.

Less than four months later now, Europe and the Americas are being held firmly in the virus’ grip. Obviously, a pair of Ray-Ban glasses was the last thing on a person’s necessities shopping list for a pandemic. As a result, EssilorLuxottica’s market value dropped 40% by mid-March. A crash, Elliott Wave analysis warned us about months in advance. Take a look.

EssilorLuxottica to enter Elliott Wave correction

The chart above was published on our website on December 30th, 2019. It revealed a complete five-wave impulse pattern, labeled (1)-(2)-(3)-(4)-(5). The five sub-waves of wave (3) were also visible, while wave (4) was an a-b-c running flat correction.

The theory states that a three-wave retracement follows every impulse and usually erases all of the fifth wave’s progress. With that in mind we concluded that EssilorLuxottica can tumble to €90 a share. With the stock above €136 then, this meant a decline of roughly a third in its market value.

EssilorLuxottica Stock was a Risky Bet at the Start of 2020

Just to be clear, we didn’t predict the coronavirus. That is not how Elliott Wave analysis works. The chart above simply told us that the market was anticipating some kind of bad news. What that bad news might be was anyone’s guess. As a means of avoiding a major blow to one’s portfolio, however, not knowing the exact reason is good enough.

EssilorLuxottica tumbles 40% on COVID-19 hit

The stock reached an all-time high of €145 on January 17th, 2020. Two months later, on March 16th, one share cost less than €87. As prescribed by the Wave Principle’s guidelines, the selloff erased the entire wave (5) and then some.

Now, buying quality companies after their stocks have declined substantially is an investment strategy with a strong track record. Unfortunately, we don’t think the bears are done with EssilorLuxottica yet. For a complete correction, we need three waves. The drop to €87 looks more like a single one, labeled (a).

If this count is correct, we can expect a short-lived recovery in wave (b) to be followed by another decline in wave (c). It seems the support near €70 a share can be reached. A bullish reversal in that area would mark the completion of the 5-3 wave cycle and the resumption of the uptrend. Until then, we believe EssilorLuxottica remains a risky bet.

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:

AMN Healthcare Stock to Suffer a 2020-Like Drop

AMN Healthcare Services provides workforce and staffing solutions to healthcare facilities in the U.S. The company is relatively small with a market capitalization of less than $4 billion. However, small companies can make for excellent returns if one happens to identify the winners. And indeed, between late-2011 and early-2020, AMN stock from under $4 to…

Read More »

Zoetis Stock Getting Ahead of Itself, Invites Correction

Based in Parsippany, NJ, Zoetis Inc. is an animal medicine and vaccine developer and manufacturer. The company went public in 2013 and has been enjoying steady growth since. With the stock currently above $160 a share, Zoetis holds a market cap of nearly $80 billion. For a profitable and growing company like Zoetis, a rising…

Read More »

CBOE Stock Looking Good After a Record Year

CBOE Global Markets Inc. is an equities, options and futures exchange operator in the U.S. and Europe. The company traces its roots back to Chicago in 1973, when it practically invented options trading in its present form. CBOE is literally part of the very infrastructure of modern financial markets. So it is not surprising that…

Read More »

Novo Nordisk Bulls Have an Elliott Wave Problem

Novo Nordisk A/S is a Danish pharmaceuticals major with a market cap of over $160 billion. People need their medication even in recessions, so the company’s business wasn’t as affected by the 2020 crisis as most other industries. Novo Nordisk remains a top-notch pharma with consistent profits and revenue and no debt whatsoever. And the…

Read More »

Lockheed ‘s Correction Still Unfolding as Expected

Almost a year and a half ago, in July 2019, we wrote that Lockheed Martin is likely “setting the stage for an unpleasant surprise.” The stock had just reached a new all-time high and was trading at $370 a share. Optimism was in the air and analysts were more bullish than ever. An indeed, fundamentally,…

Read More »

Campari Bulls to Get a Serious Hangover Soon

Campari is an Italian liquor and spirits maker with traditions dating back to 1860. The company’s stock price plunged sharply in March along with the markets in general and then recovered just as quickly to new records by year-end. As shares hover near all-time highs, however, dark clouds appear to be gathering over the spirits…

Read More »

Experian to Drop 35% Before Uptrend Can Resume

Like most technology firms, Experian adapted to the new work-from-home environment relatively quickly. The Irish data and analytics company even managed to grow its revenue in 2020, even though its EPS didn’t change much from 2019. After the initial coronavirus selloff in March, the stock swiftly recovered, as well. EXPN.L is currently hovering around 2900…

Read More »

More analyses