close icon

LEG Stock Lost 38% in Two Years. Time to Buy?

Less than two years ago, in February 2017, the price of Leggett & Platt shares was hovering above $49 a share. LEG stock was still thought to be in an uptrend, following a steady rally from $10.03 in March 2009.

However, stocks get more risky as they rise, not less. Following a 400% rally in just 8 years, many might have started thinking LEG was a sure bet. Unfortunately, as the great Peter Lynch once wrote, “stocks are most likely to be accepted as prudent at the moment they’re not.

So instead of joining LEG stock bulls above $49 a share, we decided to put our Elliott Wave glasses on. As it turned out, while everyone was still in love with Leggett & Platt, its weekly chart already had “danger” written all over it.
LEG stock Elliott Wave chart
This chart was included in an article called “Leggett & Platt Not Done Falling”, published on February 27th, 2017. It revealed that LEG’s entire rally from $10 to almost $55 had the structure of a textbook five-wave impulse. The five sub-waves of (1) and (3) were also clearly visible. In addition, waves (2) and (4) obeyed the guideline of alternation. Wave (2) was a sideways expanding flat correction, while wave (4) was a sharp zigzag.

LEG Stock Not a Wall Street Favorite Anymore

The reason for our pessimism rooted in the Elliott Wave postulate that a three-wave correction in the opposite direction follows every impulse. Since wave (5) seemed to be over already, we thought a three-wave decline to the support of wave (4) can be expected in LEG stock. The updated chart below shows the suffering Leggett & Platt investors had to go through recently.
LEG stock Elliott wave forecast
Wave (b) led LEG stock to a new all-time high of $54.97 in April 2017, only to make wave (c) even worse. The share price fell to as low as $34.07 last month, which translates into a 38% selloff in just 18 months. Fortunately, Elliott Wave analysis helped us dodge that bullet.

What to expect from now on? Well, the new high in wave (b) means LEG stock is most likely drawing an expanding flat correction. Wave (c), currently in progress, needs to evolve into a complete impulse pattern. Waves 4 and 5 of (c) are still missing so it makes sense to expect more weakness in the mid-term. The support area near the 61.8% Fibonacci level is a reasonable bearish target.

On the other hand, once the stock approaches $30 a share, we should get ready for a bullish reversal. Leggett & Platt is a profitable company, which managed to maintain revenue growth despite all the headwinds in the industry. The current weakness looks like the opportunity long-term investors have been waiting for.

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar dangers (and opportunities) yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

UnitedHealth Stock Looks Strong Despite Uncertainty

Whether Obamacare is unconstitutional or not is up to the policy makers, but the uncertainty surrounding the matter caused a broad selloff in the healthcare sector. Cigna, Humana, CVS Health and UnitedHealth lost a significant chunk of their respective market caps after the DOJ sided with a December 2018 Texas district court ruling that the…

Read More »

The Elliott Wave Pattern behind Disney ‘s 30% Gain

Depending on the amount of time a position is kept open, traders can be separated into three categories: scalpers, day traders and position traders. The third group is known for holding a position for weeks, months or more if required. That group was recently rewarded by the sharp surge in Walt Disney stock. A little…

Read More »

BURL Stock Approaching a Dangerous Area

Burlington Stores Inc. is a branded apparel retailer, which operates approximately 670 stores in the United States. The company, founded in 1972, was taken private in 2006, only to re-emerge as a public entity again in 2013. And while the company’s business performance has been steadily improving in recent years, BURL stock rose in tandem.…

Read More »

NetEnt stock Looking for an Elliott Wave Bottom

NetEnt AB, based in Stockholm, Sweden, is a leading global provider of digital distributed games and gaming systems to online casino operators. It is also a good example of a company, whose shareholders became a victim of the market’s vicissitudes. NetEnt stock reached an all-time high of SEK 88.53 on June 1st, 2016. Less than…

Read More »

Synchrony Financial Draws Bullish Elliott Wave Pattern

Synchrony Financial spun off from General Electric less than five years ago, but its shareholders have already experienced plenty of market turbulence on their own. 2018, for example, was nothing to brag about. The stock plunged from an all-time high of $40.59 in January to as low as $21.78 in late December. And as it…

Read More »

Chipotle Stock Bulls Aiming at $900 a Share

The last time we wrote about Chipotle Mexican Grill, the stock was hovering around $470, following a rally from $248 in six months. The company was recovering from its 2016 E.coli, salmonella and norovirus outbreaks and Wall Street was once again embracing Chipotle stock. However, instead of joining the bulls right away, we decided to…

Read More »

General Mills Stock Up by a Third in Three Months

General Mills stock plunged by 50% in the second half of 2018, following a decline from its July peak of $72.95. So, when the stock touched $36.42 in late-December most investors were not exactly optimistic about it, to put it mildly. On the other hand, the Elliott Wave analysis of GIS‘ daily price chart, published…

Read More »

More analyses