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Live Nation Stock is a Bull Trap Right Now

Live Nation Entertainment Inc., as its name suggests, is a live entertainment company, founded in 2005 and headquartered in Beverly Hills, California. If you need a concert ticket, they could help you. But what interests us is the company’s stock. Like many other stocks, Live Nation’s bottomed out in March 2009 at as low as $2.47 a share and has been recovering ever since. A year ago, in October 2015, the price reached as high as $29.68 and after a swift drop to $18.77 by February 2016, is currently headed for the $30 mark again. Now let’s take a look at Live Nation’s weekly chart to see how all these price levels fit into our Elliott Wave analysis of the stock.
live nation entertainment-10-10-16
Live Nation’s weekly chart is a textbook example of stock prices following several Elliott Wave rules and guidelines at the same time. For instance, wave 5 of (1) is extended. The guideline states that extended fifth waves are usually fully retraced. As you can see, wave (2) declines exactly to the 61.8% Fibonacci level, thus erasing almost all of wave 5’s gains.
The guideline of alternation has also been taken into account, since wave (2) is a zig-zag pattern, while wave (4) is an expanding flat correction. Additionally, the entire five-wave impulse has been developing between the parallel lines of a trend channel. So, it appears Live Nation stock is now advancing in wave (5) of the impulsive sequence. According to the Wave principle, every impulse is followed by a three-wave correction of similar degree in the opposite direction. This means that the stock is likely to climb to a new high around $30, but instead of joining the bulls there, investors should get out of the way, because the bears are likely to take control. On the downside, the anticipated correction should be deep enough to reach the support area of wave (4). In other words, once we see $30, we should get ready to go back to $20. A plunge of about 30% could be expected soon in Live Nation Entertainment’s stock.

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