We last wrote about Danish hearing aid device maker GN Store Nord in early-October, 2021. The stock was trading near DKK 430 a share, down 27% from its record high of DKK 589 three months prior. Given the company’s strong market position, financial stability, profitability and growth rate, many saw the recent decline as a buying opportunity.
Our Elliott Wave analysis, however, suggested that GN Store Nord can tumble by another ~40% towards the support near DKK 250. That was more than eight months ago. As of last week’s market close, the stock stood at DKK 218, down 49% since we shared our bearish opinion with readers.
On the other hand, we also wrote that below DKK 250, GN Store Nord would be in the bargain bin. And indeed, at a 2022 P/E ratio of 13, it seems to offer good value. Now, let’s check if the charts align with the company’s seemingly bullish fundamentals.
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To be honest, back in October, 2021, we though it would take more time for the price to drop this much. After taking a closer look, the charts now inspire a better idea. It looks like instead of a simple A-B-C zigzag, the stock has drawn an expanding flat correction.
Wave V actually ended at DKK 561 in February, 2021. It was followed by a small dip in wave A and a three-wave recovery to a new high in wave B. That way, the five-wave impulse pattern that is the crash from DKK 589 fits in the position of wave C. If this count is right, the corrective phase of GN Store Nord ‘s Elliott Wave cycle is almost complete.
According to the theory, once a correction in over the preceding trend resumes. In this case, the preceding trend was clearly pointing north, so it makes sense to expect a bullish reversal soon. Besides, wave C has now entered the support area near the 61.8% Fibonacci level. That is where retracements often end, which gives us another reason for optimism.
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