While Intel stock was trading around $37.15 on September 20th, 2016, we published an ARTICLE, called “Patient Intel Bulls Get Their Reward.” In that material it became clear that despite the recent advance, it was not the time to buy the stock, because a fourth wave pullback was supposed to begin soon. Only after it was over, the buyers were supposed to return and lift the price to a new high in wave five. That forecast is shown on the chart below.
Since there has been a five-wave impulse between $24.86 and $35.27, we thought another one should emerge from $27.67 upwards. By September 20th, the fourth and fifth waves of the pattern were still missing and that is why we were expecting them. Simple as that. Today, over four months later, Intel stock is hovering near $37.40, a week after $38.43 has been reached.
The anticipated fourth wave, marked here as (iv), dragged shares to as low as $33.45 on November 4th, but then the bears gave way to the next phase of the rally – wave (v) – which traveled all the way up to $38.43, thus exceeding the top of wave (iii) and fulfilling the minimum requirement for a regular fifth wave.
Two consecutive moves correctly predicted. Well done, Elliott Wave Principle. But now what? According to the theory, a three-wave correction follows every impulse. This means that once again, it is not a good time to join the bulls, because another decline at least to the support area near $34 – $33 might be underway in wave 2. Furthermore, the relative strength index shows the typical bearish divergence between waves (iii) and (v) of 1/(C), which is another reason to stay on the sidelines for now. If this analysis is correct, Intel stock might lose between $4 and $5 a share from now on. Why stay in the bears’ way?
