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:

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either. YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared…

Read More »

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

Moody’s, a Buffett Darling, Trading in Late Fifth Wave

Moody’s Corp. has been a long-time holding in the Berkshire Hathaway portfolio. It is also the seventh biggest position in it as of the end of March 2020. The company has a strong competitive advantage, it is highly profitable and growing. No wonder Warren Buffett likes it so much. The stock did decline sharply in…

Read More »

Dollar General Stock Bulls are Looking for Trouble

As a general merchandise discount retailer, Dollar General was among the handful of businesses that actually benefited from the pandemic. People piled on necessities preparing for what looked like the end of the world for a while. As a result, sales at Dollar General surged in the midst of the crisis. While its stock price…

Read More »

Veeva Systems Stock Trades in Bubble Territory

It is true that the Fed’s recently re-adopted zero rate policy and stimulus are distorting financial markets. Interest rates are like gravity to financial assets. The lower the rate, the higher asset prices go and vice versa. As a result, stocks in general tend to ignore the economic reality right now. Among the companies trading…

Read More »

More analyses