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London Stock Exchange Stock Needs a Breather

Stock exchanges are the places where the shares of publicly traded companies change hands. But sometimes we forget that the exchanges themselves are operated by a company, as well. Usually, those companies are also public with their stocks trading on the exchange, too. That is exactly the case with the London Stock Exchange Group plc.

The company’s stock, of course, trades on the London Stock Exchange under the symbol LSE.L. At last check, the price was 8877 pence or 88.77 GBP per share. The London Stock Exchange Group went public 19 years ago and saw tremendous appreciation over that period. Let’s take a look at it below.

London Stock Exchange stock price history

The weekly chart takes us back to August 2001, when the LSE’s uptrend began. The stock rose from 252 to 2002 by early-2008, but the Financial Crisis erased almost all of those gains by March 2009. From then on, however, it has been a real bonanza, especially for long-term investors.

London Stock Exchange stock climbed to 8628 by February 2020 before the COVID-19 market crash brought it down to 5300 in March. However, it turned out the coronavirus panic was short-lived. As of this writing, the stock is trading at new all-time highs.

London Stock Exchange Out of the COVID-19 Crisis and Back in Bubble Zone

Now, putting all those figures into Elliott Wave context reveals that the entire uptrend since 2001 is a five-wave impulse. The pattern is labeled I-II-III-IV-V, where wave III is extended and wave V is still unfolding.

According to the theory, a three-wave correction follows every impulse before the larger trend can resume. Trying to predict where the top will form is not only pointless, but dangerous. Besides, it looks like the bulls are willing to go for the 10 000 pence a share mark before giving up.

The important thing is that once wave V is over, a notable corrective pullback should be expected to drag LSE.L back to the support of wave IV near 5300. And if the bearish Elliott Wave message is not enough, the stock trades at a P/E ratio close to 80, suggesting extreme overvaluation. In our opinion, there is enough evidence to conclude that the London Stock Exchange Group plc is a very risky investment right now.

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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