close icon

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 chorus of negative opinions at the time, we thought “Humana stock bulls haven’t lost the battle yet“. According to the chart below, targets near $400 were still plausible, giving the stock more than 50% upside potential.

Humana to add 50% in fifth wave

The chart revealed that Humana’s entire uptrend since the bottom at $4.75 in June 2000. It looks like a five-wave impulse, whose fifth wave is still missing. Wave IV had already touched the 38.2% Fibonacci level where fourth waves often terminate.

Fifth waves are never a safe bet, but given the company’s high quality the stock was worth the risk near $260. Eight months later now, things are very different and the risk/reward ratio is no longer so favorable. Take a look.

Humana approaching the end of the Elliott Wave impulse pattern

Humana stock closed slightly below $357 a share on Friday, down from $376.40 and up 37.3% since our May 2019 article. The problem is that stocks get more risky as they rise, not less. HUM is simply not as attractive near $360 as it was at $260.

Humana Is Not as Good a Buy in 2020 as It Was in 2000

In fact, the five-wave impulse pattern, which has been developing for the past 20 years makes Humana rather dangerous. A three-wave correction in the other direction follows every impulse. With an almost complete I-II-III-IV-V on the stock’s weekly chart, it is time for Humana investors to get defensive.

$400 is still there for the taking in the short-term in wave (5) of V, but overall the stock is in bearish reversal area. The anticipated retracement can drag Humana down to the support of wave IV near $200 for a 50% decline. It is the same pattern that preceded the recent 32% drop in Boeing and the 43% crash in ServiceMaster. Humana bulls should keep that in mind if complacency starts to settle in.

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:

MongoDB – Bearish Pattern Joins Nosebleed Valuation

MongoDB Inc. is a general purpose database platform developer and provider. The company was founded in 2007, but only came public ten years later – in 2017. During the following four years, the stock has risen from an IPO price of $33 to $515 a share as of last week. So, it is fair to…

Read More »

Pandora Does Things Right. Stock May Need a Breather

When we wrote our previous article on Danish jewelry maker Pandora in December, 2020, the stock was up over three-fold since March. That recovery from DKK 180 to DKK 651 didn’t not come out of the blue, though. It was the result of a bullish setup we managed to identify as early as July 2019.…

Read More »

Match ‘s SP500 Inclusion a Good Excuse to Reach $200

Match Group Inc. rose over 10% in post-market trading Friday following reports that it is going to be included in the S&P 500. The company, which owns Tinder, OkCupid and most other major dating apps in the U.S., has a market cap of over $41B. Despite the anticipated “summer of love”, though, this is not…

Read More »

Cameco Stock Seems to Have Finally Turned a Corner

Uranium spot prices are on the verge of breaking above $34/lb, up over 80% from the bottom of $18/lb reached in late-2016. Cameco, as one of the world’s top uranium producers, is now seeing its stock price rising in tandem. Yesterday, it closed at $19.16 after reaching $21.95 in June. We first covered Cameco in…

Read More »

A Fresh Look At Cigna ‘s Elliott Wave Super Cycle

In a case study article on Cigna, published in October, 2016, we examined how a fundamentally sound and undervalued stock can still drop nearly 90%. The reason for that crash didn’t lie in some company specific issue. Rather it happened to occur during the biggest financial crisis in 80 years. Nevertheless, we made the point…

Read More »

CBOE Takeover Rumor Lifts Stock to Elliott Wave Target

We first wrote about CBOE Global Markets less than eight months ago. The S&P 500 had already recouped all its COVID selloff losses and was hovering at new all-time highs. CBOE, in contrast, was still down 30% from its 2018 record, trading below $97 a share. For some reason, the market was ignoring the company’s…

Read More »

Ahead of Ulta Beauty ‘s 150% Gain Since Lockdown

Buying shares in a beauty retailer in March 2020 sounded like a crazy, stupid idea. Stock markets around the world were plunging at a record pace amid a global GDP crash resulting from government-enforced lockdowns. People were stockpiling necessities in preparations not to leave their homes in the foreseeable future. With COVID-19 cases rising everywhere,…

Read More »

More analyses