close icon

Glencore’s Subpoena Plunge in Elliott Wave Context

Glencore, the world’s largest cobalt miner, plunged by as much as 13% in intraday trading on Tuesday after the news spread that the company has received a subpoena from the U.S. Department of Justice. Authorities are requesting documents regarding Glencore’s business in Congo, Venezuela and Nigeria as the company is under suspicion of corrupting government officials in the three countries to win contracts.

However, analysts at Barclays and Credit Suisse pointed out that such requests are actually quite common. Glencore has not been found guilty of anything yet and the sharp selloff in its share price looks like an overreaction by investors.

This makes us wonder why did the market react so violently to something which might or might not be such a big deal. Ralph Nelson Elliott once wrote that “the habit of the market is to anticipate, not to follow.” Was the market already anticipating bad news in the days leading to the current plunge? In order to find out, we need to put it into Elliott Wave context.
Glencore Elliott wave analysis
The daily chart allows us see Glencore’s rally from 66.7 GBp in September 2015 to as high as 416.9 GBp in early-2018. It could easily be seen as a five-wave impulse pattern with an extended third wave, whose sub-waves are also clearly visible. This means the current subpoena-inspired crash must be part of the three-wave correction, which naturally follows every impulse. It looks like the stage was, indeed, set for a decline. Glencore stock was supposed to drop with or without the DOJ investigation. In this respect, the subpoena is only a catalyst for what had to happen anyway.

Now, the next support lies near the termination area of wave (iv) of 3. This leaves the door open for the bears to drag the share price to possibly 270 pence in wave C in the short term. The long-term outlook, on the other hand, remains positive, because according to the theory the uptrend should be expected to resume as soon as wave (2/B) is over.

Did you like this analysis? Learn to do it yourself with our eBook Elliott Wave guide!



Stay informed with our newsletter

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

Privacy policy
You may also like:

Clorox Stock Can Lose 25% if a Recession Hits in 2020

As a consumer products manufacturer Clorox is one of the so-called “defensive” companies, whose sales are generally not dependent on the state of the economy. However, this doesn’t mean Clorox stock cannot fall during a general market decline or a recession. For instance, it lost 57% in the 1999-2000 rout and over 34% during the…

Read More »

Ubiquiti Can Dive in a 50% Elliott Wave Correction

Headquartered in New York, Ubiquiti Inc. is a communication equipment manufacturer with a market cap of ~$13 billion. The stock is up 85% since its late-August low and is now trading in the vicinity of $200 a share. Understandably, such sharp and fast rallies easily attract people’s attention. Extrapolation of the past into the future…

Read More »

Disney Stock Forming a Major Elliott Wave Top

The last time we wrote about Disney stock was on April 17th. The company had just announced its own streaming service, sending the price sharply higher to over $130 a share. The interesting part was not the surge itself, but the fact that the Elliott Wave principle managed to prepare us for it a year…

Read More »

Bristol-Myers Stock Pattern Triggers a 37% Surge

Bristol-Myers Squibb and Celgene are expected to merge into a single company before the end of the year. The deal will create the fifth largest pharmaceutical company in the world with sales of approximately $42 billion in 2019. Bristol-Myers fell sharply after the deal was announced in early-January. In late-April, the stock was still in…

Read More »

Home Capital: Third Wave Lifts Stock 140% in 2019

Home Capital Group is up 17.4% in Toronto today following the company’s third quarter financial report. The mortgage lender beat analysts’ earnings expectations and delivered improvements in other areas, too. In total, HCG is up ~140% in 2019. But things didn’t look so rosy at the beginning of the year. The stock was hovering in…

Read More »

Walgreens: Did the Market Foresee that KKR Offer?

Anyone who’s been in Elliott Wave analysis long enough has noticed how often some external factor “makes the price move” in the direction the analysis had identified much earlier. We’ve seen it happening in crypto, we’ve seen in happening in stock indices. Now, it happened with Walgreens stock. Walgreens jumped on November 5th after CNBC…

Read More »

SERV Stock Gave a Warning Before Crashing 40%

The last three weeks have been tough on ServiceMaster shareholders. SERV stock was hovering around $56 a share as October went into its final third. But when the company announced its preliminary Q3 results on October 22nd, all hell broke loose. Apparently, Wall Street didn’t like what it saw, which resulted in a swift and…

Read More »

More analyses