Globe Life Inc. is a life and health insurer founded in 1900 and headquartered in McKinney, Texas. Unlike the S&P 500, which it is part of, GL stock is down this year after Fuzzy Panda’s short report obliterated the share price in April. The stock crashed from an all-time high of $132 on February 22nd to $39 a share by April 11th. We don’t think we have enough information to judge on the merits of the hedge fund’s accusations, but given the sharp recovery to over $110 as of this writing, they’re unlikely to be a real threat to the company’s survival.
Instead, we’ll delve into the structure of the Elliott Waves Globe Life has been drawing. As the 4-hour chart below shows, the post-April recovery looks like a very clear impulse pattern on the verge of completion.
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The sharp surge from just under $39 a share can be seen as a five-wave impulse, marked (1)-(2)-(3)-(4)-(5), where wave (5) is still in progress. Two lower degrees of the trend are visible within the structure of wave (3). If this count is correct, we can expect a new swing high in wave (5) soon. On the other hand, a three-wave correction follows every impulse. So instead of joining the bulls here, we think investors would be wise to wait for wave II/B to drag Globe Life to the support near $90 a share before jumping in. A new all-time high would then make sense in wave III/C.
But what about that February-April crash? Does it fit into a bigger Elliott Wave pattern and how? Let’s zoom out to the weekly price chart of Globe Life stock to answer that question.
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It shows that the plunge from $132 to $39 was preceded by another textbook impulse pattern, labeled I-II-III-IV-V. The five sub-waves of wave III are again visible, and even wave (1) of III is easily marked 1-2-3-4-5. Wave V is an ending diagonal, which, just as Ralph Elliott himself observed long time ago, was followed by a “swift and sharp” reversal. Perhaps too swift and sharp this time.
This structure suggests that the April crash fits in the position of supercycle wave (II), correcting the huge impulse pattern that came before it. Note how the bulls returned shortly after Globe Life stock entered the support area around the 61.8% Fibonacci level. It is true that wave (II) doesn’t look like a clear three-wave structure, but this is not unusual in times of panic. If this count is correct, wave II/B could be investors’ last chance to buy under $100 a share, before the price takes off. Not to mention that GL is cheap enough as it is, trading at just 8 times its estimated 2025 earnings.
