close icon

Ferrari Stock to Hit the Brakes Soon?

Ferrari is capable of incredible speeds and not just their cars. Ferrari N.V. held is NYSE initial public offering in October 2015 and after a decline to $31.66 per share in February 2016, the stock began an incredible rally. Two years later, the bulls reached a high of $130.63 for a 312% total gain, which translates into a compounded rate of return of 103.1% per year. In other words, Ferrari stock easily beat all major benchmark indices money managers compare their performance to. Does this mean it is time to add it to your portfolio?

ferrari stock elliott wave analysis

The daily chart of Ferrari stock above shows its entire 2-year rally from the lows in February 2016. It is very impressive, indeed. Unfortunately, it looks like a textbook five-wave impulse pattern, whose wave 3 is extremely extended, which helps us see its sub-waves, as well. The problem is that according to the Elliott Wave Principle, a technical analysis method we use to stay ahead of market reversals, every impulse is followed by a correction of three waves in the opposite direction. In Ferrari stock’s case this means that instead of joining the bulls near $124 a share now, investors should proceed with great caution.

In addition to the wave count, the relative strength index shows a typical bearish divergence between waves 5 and 3, which is another reason not to buy Ferrari stock at current levels. The anticipated three-wave correction needs to retrace a respectable part of the preceding rally. If this count is correct, a decline to the $80 mark is very likely from now on, despite the company’s record-breaking business results in 2017.



Stay informed with our newsletter

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

Privacy policy
You may also like:

Foot Locker Resurrected by Elliott Wave

Less than two months ago, on April 1st, we published an article about Foot Locker. While the stock was hovering around $45.50, its hourly price chart revealed an Elliott Wave pattern, which encouraged us to believe the worst was over for this sporting goods retailer. Take a look at it below to refresh your memory.…

Read More »

American Express Stock in Reversal Territory

American Express stock fell to as low as $50.27 in February 2016 after the company’s net income fell by 12% in 2015. But as it usually happens with great companies, AXP was quick to rebound and less than two and a half years later the stock is trading near all-time highs above $100 per share.…

Read More »

BAC Stock Headed to $40 a Share

After two consecutive years of spectacular gains, which nearly tripled Bank of America’s market cap, the too-big-to-fail financial institution is having a slower, but still strong start of 2018. BAC stock is up 5.22% year to date, easily outperforming the S&P 500. Besides, analysts’ estimates for the company’s future earnings are constantly improving. As of…

Read More »

Buckle Stock Gains 40% in Two Months

Two months ago, on March 15th, we published an Elliott Wave analysis of The Buckle stock (NYSE:BKE), saying that “the stage is set for a surge.” At the time of writing, the stock was barely holding above the $18 mark after a decline of nearly 30%. But instead of joining the bears, we thought that…

Read More »

Alibaba Stock Attacks $220 but Runs on Fumes

Jack Ma’s Alibaba Group made its NYSE debut at $92.70 a share in September 2014. The initial bullish enthusiasm lifted Alibaba stock rice to $120 two months later, but once it settled down BABA entered a bear market, which erased over 50% of the company’s market value by September 2015. On January 31st 2018, Alibaba…

Read More »

Expedia Stock Investors Cannot Feel Safe Yet

Expedia stock reached its all-time high of $161 in late-July 2017, but has been a big disappointment ever since. The stock fell to as low as $98.52 in February 2018, and after a recovery to $118 so far, it is still down by 29.5% from its record high. Now, Expedia Group Inc. is a profitable,…

Read More »

Yum Brands Stock Looking at a 20% Correction

In just over two years, Yum! Brands stock (NYSE:YUM) nearly doubled from as low as $46.44 in February 2016 to $87.45 earlier this month, bringing the total market capitalization of the fast-food restaurant chain to over $29 billion. Does this mean now is the time to jump on the bandwagon in anticipation of even better…

Read More »

More analyses