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Humana Stock Bulls Haven’t Lost the Battle Yet

Humana (NYSE:HUM) climbed to an all-time high of $356 in early November 2018, following a rally from as low as $18.57 in March 2009. In less than ten years, the company rewarded the patience of its investors with a total return of over 1820%, not counting dividends.

Unfortunately, the last six months were nothing like the past ten years. In mid-April, Humana dived below $223, down over 37% from its peak. Now, if this is the start of a bigger selloff, then it is time to stay aside. But could it actually be a buy-the-dip opportunity?

Humana stock

The weekly chart above allows us to put Humana’s entire progress since the year 2000 into Elliott Wave context. The Financial Crisis of 2008-2009 is labeled as wave II. The phenomenal uptrend to $356 is a textbook five-wave impulse in wave III.

Humana Bulls Aiming at $400 a Share Before Giving Up

This brings us to the present and the recent pullback, which fits in the position of wave IV. It has already touched the 38.2% Fibonacci level, where fourth waves often terminate. The missing piece of the puzzle is wave V. Provided it’s not a truncation, the fifth wave is supposed to exceed the top of wave III. In terms of price, wave V’s initial targets lie near $360 a share, but $400 is quite reasonable as well.

On the other hand, the bulls should tread very carefully. According to the theory, a three-wave correction in the opposite direction follows every impulse. Investors hoping that the 2019 dip is going to fuel a rally similar to the one that followed the dip in 2009 are up for a disappointment.

If this count is correct, Humana is still in an uptrend and aiming at a new all-time high. However, a bearish reversal near the $400 mark can open the door for a ~50% plunge towards the support near $200 a share.

Did you like this analysis? 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!



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