close icon

FOSL Stock Ready to Exceed Expectations?

In October 2013, Fossil Group had a market cap of roughly $7.5 billion. The watchmaker was enjoying record sales and profits, which was supposed to propel FOSL stock, then hovering above $130 a share, even higher. Fast-forward six years and the company is currently valued at less than $650 million with the shares barely above $13. No trend lasts forever and Fossil’s 90% crash is a great reminder of that fact.

The first half of 2018, on the other hand, painted a different picture. A couple of decent earnings reports inspired the bulls to lift FOSL stock from ~$6 to ~$32. Unfortunately, the business was still too vulnerable to sustain such a high price.

Note that Fossil’s stock price headed south when its fundamentals were still looking very strong. Can the stock start climbing now, while the company is still weak? What the next earnings report will bring is anyone’s guess. Instead, let’s take a look at the situation through the prism of the Elliott Wave principle.

The 4-hour chart sheds light on the structure of FOSL stock’s behavior since the bottom at $5.50 in November 2017. The rally to over $32 by June 2018 can be seen as a five-wave impulse pattern, labeled 1-2-3-4-5.

Wave 3 is a big gap formation. In most cases, the third wave is the longest among waves 1, 3 and 5 in an impulse. Not this time though. In this impulsive pattern wave 5 is the extended one. Its sub-waves, labeled i-ii-iii-iv-v, are also visible.

The theory states that every impulse is followed by a correction, which usually erases all of wave 5’s gains. This rings true for FOSL stock even though wave 5 is very big. It took of from $11.40 and has been almost entirely retraced by the following decline.

Is FOSL Stock Forming a Base?

But that is not the most important part here. According to the Wave principle, once we have a complete impulse-correction cycle, we can expect the trend to resume in the direction of the five-wave sequence. This means that if this count is correct, the bulls should soon return and lift Fossil stock above the top of wave 5 in the long-term.

If you think the implied rally of roughly 150% is far-fetched, keep in mind that this very stock surged by over 430% in seven short months between November 2017 and June 2018. Besides, the company is in a much better shape now. It is getting rid of underperforming stores, reduced its net-debt to 0 and generated free cash flow equal to a third of its market cap in 2018 alone.

Fossil is definitely not out of the woods yet, but this Elliott Wave analysis suggests it can soon exceed investors’ low expectations.

Did you like this analysis? 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!

Disclosure: the author holds a long position in FOSL stock.



Stay informed with our newsletter

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

Privacy policy
You may also like:

Ulta Beauty No Longer a Wall Street Darling

Ulta Beauty ‘s phenomenal uptrend started from $4.11 in March 2009 and did not stop until $368.83 in mid-July 2019. The company’s market value grew by almost 8900% in just ten years, easily earning Ulta a Wall Street darling status. Unfortunately, Wall Street likes fast-growers only as long as they keep growing. Ulta Beauty reduced…

Read More »

Is Oil States Stock Finally Ready for a Rebound?

The last time we wrote about this relatively unknown oil services provider was over two years ago, in August 2017. Oil States stock was trading near $21.50 a share following a decline from almost $42. Yet, with the help of the Elliott Wave principle, we concluded the price can get cut in half again “to…

Read More »

Can this Elliott Wave Setup Cut Seek Stock in Half?

Seek Limited operates online platforms where jobseekers can find employment opportunities. The company is based in Australia, but also conducts business in China, India, New Zealand and Brazil, among others. Seek stock is traded on the Australian Stock Exchange under the symbol SEK. Seek stock lost over 78% during the 2007-2009 global crash, but has…

Read More »

Realty Income Pattern Sets the Stage for a 40% Drop

Realty Income Corp. is a REIT dedicated to delivering dependable monthly dividends to investors. The company owns over 5900 real estate properties and has a market value of roughly $23.5 billion. Adjusted for splits, it went public in 1994 at $8 and reached an all-time high of $76.73 two days ago. Not counting the dividends,…

Read More »

Walgreens Stock Can Add Roughly 30%

On December 4th, 2018, Walgreens stock was trading north of $86.30 a share. Yesterday, it closed at $51.43 for a total loss of 40.4% in nine months. Nine months in which the general stock market has been rallying. Walgreens Boots Alliance is a pharmacy retailer with over 18 500 stores in 11 countries. Walgreens is…

Read More »

Rapid7 Stock is Prone to Decline… Maybe Rapidly

Rapid7 stock appreciated by over 630% between February 2016 and July 2019. The price climbed from $9.05 to $66.01 in less than four years on the back of strong secular growth in the cyber security industry. However, Rapid7 hasn’t been able to capitalize on the vast opportunities in the space. The company posted annual losses…

Read More »

Can Facebook ‘s Antitrust Concerns Fulfill this Setup?

This article was originally published on June 13th, 2019.  It was updated on August 7th, 2019. 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. Escalating antitrust concerns are not helping the bulls’ cause, either. Facebook stock still hasn’t been able to fully…

Read More »

More analyses