InterActiveCorp. or IAC for short, is a $19 billion media and internet services company. It is the controlling shareholder of Match Group, which in turn operates Tinder – the online dating app. IAC stock was beaten down heavily during the Financial Crisis.
In March 2009, IAC stock fell to $13.23 a share, down 92.3% from its July 2003 peak. There aren’t too many stocks out there that have managed to fully recover from a 90% crash, but InterActiveCorp. is one of them. The company found its way again and climbed to a new high of $242.88 earlier this month.
Usually, when a stock is up over 1750% in ten years “caution” is not a word you hear very often. However, trends tend to reverse when you least expect it. In order to find out if IAC stock’s rally can be relied on, let’s take a look at its weekly chart through an Elliott Wave perspective.
Trends move in waves, which in turn form repetitive and recognizable price patterns. The weekly chart of IAC allows us to recognize maybe the most well-known pattern in the Elliott Wave catalog – the impulse.
A smaller five-wave structure in wave (1), labeled 1-2-3-4-5, was followed by a sharp decline to $38.82 in wave (2) in 2016. Then, wave (3) multiplied the stock price by more than 5.5 by September 2018. Wave (4) erased 29% of InterActiveCorp’s valuation, before the bulls came back to conquer $242 a share in wave (5).
IAC Stock Not Safe Anymore
All is well when it ends well, right? It depends on where you stop telling the story. Unfortunately for IAC stock bulls, the Elliott Wave principle states that a three-wave correction follows every impulse. This means that instead of hoping that the future will resemble the past, IAC shareholders should prepare for a notable pullback. Besides, the complete impulse pattern is not the only reason for caution. The RSI indicator shows a strong bearish divergence between waves (3) and (5), highlighting the bulls’ decreasing strength.
The anticipated retracement can be expected to drag IAC stock back down to the sub-$150 area. In our opinion, a ~35% decline from current levels is very likely in the not-so-distant future.
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!