close icon

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 the mid-teens in January, still within the boundaries of a range it had been unable to leave for over 18 months. However, a quick Elliott Wave look at Home Capital’s 4-hour chart made us optimistic, so we shared it with our readers on January 9th. Let’s take another look below.

Home Capital stock Elliott Wave forecast

Home Capital was trading slightly below C$16 at the time. The 4-hour chart revealed that the price action from C$5.06 had formed a sequence of first and second waves, labeled 1-2-(i)-(ii). Wave 2 was a textbook A-B-C simple zigzag with a triangle in the position of wave B.

Home Capital Stock Doubles in Less than a Year

This meant that if we were right, Home Capital stock should soon head north in wave 3. Third waves are what every Elliottician dreams of, because they usually take the price much higher than the first wave. This made us conclude that “Home Capital seems to be in a position to reward investors in 2019 and beyond.” We don’t know about the “beyond” part yet, but…

Elliott Wave rally takes Home Capital stock 140% higher in 2019

…2019 has really been a wonder to behold. The bulls took the wheel almost right away and are still in the driving seat as of this writing. HCG exceeded the C$34 mark today, making the company’s near-collapse in 2017 feel like a bad dream.

And that is the problem. When people leave caution at the door, it is usually time to start worrying. From an Elliott Wave perspective, the stock is close to the 161.8% Fibonacci multiple of wave 1. This barrier is often a tough nut to crack for third waves. In our opinion, investors should proceed with caution as the price approaches C$40. If this count is correct, wave 4 down might be just around the corner.

Besides, from a fundamental point of view, it is not a secret that Canada’s housing market shows some bubble-like characteristics. Companies like Home Capital may face some difficulties if house prices start tumbling across the board.

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!

Stay informed with our newsletter

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

Privacy policy
You may also like:

Humana Completes a Pattern it Started 20 Years Ago

It’s been eight months since we last wrote about Humana. The stock was hovering around $260 in May 2019, following a plunge from as high as $356. And while there were plenty of things to worry about, a combination of Elliott Wave and Fibonacci analysis made us optimistic about Humana’s prospects. Instead of joining the…

Read More »

JNJ Stock Pattern Suggests Uptrend is Almost Over

Despite its top quality, Johnson & Johnson didn’t fully participate in the post-2009 bull market. JNJ stock is up 224% since the bottom of the Financial Crisis, while the Dow Jones added 354% in the same period. However, JNJ stock climbed to a new all-time high last week in a breakout that makes the bulls…

Read More »

Steel Dynamics Completes Bearish Wave Setup

Steel Dynamics stock climbed 40% throughout the second half of 2019. The share price rose from $25 to almost $36, but that’s after a decline from $52.10 in May 2018. In other words, despite the recent recovery STLD is still down 36.7% in the past 19 months. Can the steel manufacturer stock’s revival continue or…

Read More »

Spirit AeroSystems Not an Elliott Wave Bargain Yet

In the ten years between November 2008 and January 2018, Spirit AeroSystems stock surged 1373%. The rally from $7.14 to $105.20 made anyone who happened to catch even a part of it quite happy. The following two years, on the other hand, not so much. Spirit AeroSystems is down by a third in the last…

Read More »

Shopify Investors Probably Believe in Unicorns, Too

Shopify is a cloud-based commerce platform founded in 2004 and headquartered in Canada. Its market cap is approaching $50 billion, even though the company is not yet profitable. We know from history that profits determine a business’ success in the long-term. In the short run, however, investors’ emotions is what makes a stock rise or…

Read More »

EssilorLuxottica To Lose a Third in Elliott Wave Drop

EssilorLuxottica came into existence in October 2018 after the French Essilor acquired the Italian Luxottica in a $24 billion deal. The merger resulted in the world’s largest eyewear company with a market cap of roughly 60 billion euro. Listed on the Euronext Paris stock exchange, EssilorLuxottica is part of the French CAC 40 and the…

Read More »

Linamar ‘s 2020 is Shaping up to be a Great Year

Founded in 1966, Linamar Corp. is the second-largest automobile parts manufacturer in Canada. The stock is listed in Toronto and had an exceptionally strong run between 2009 and 2015. In a little over six years, the share price rose from as low as C$2 to as high as C$89.42. That’s 88.4% compounded annually. Unfortunately for…

Read More »

More analyses