Despite the fact that 2018 was the best year in Monster Beverage Corp.‘s history in terms of earnings and revenue, MNST stock was another story. The share price reached an all-time high of $70.22 per share in January 2018, but eventually closed at $49.22 in December. A decline of almost 30%. Obviously, improvements in business results don’t always translate into higher stock prices.
However, MNST stock closed at $60.60 per share yesterday, adding over 23% so far in 2019. Does this mean it is time to buy into Monster Beverage again? Let’s apply the Elliott Wave principle and see if we can answer that question.
The 4-hour chart reveals the stock’s development since the top at $70.22 in January 2018. The first thing that grabs our attention is the five-wave impulse down to $47.61 in May. It is labeled 1-2-3-4-5 in wave (A) and means the following three-wave recovery to $66.40 is wave (B).
If this count is correct, the bearish 5-3 wave cycle is complete. According to the theory, we can now expect another leg down in wave (C), whose targets lie below the bottom of wave (A). $45 a share looks like a reasonable destination for the bears to reach.
Unfortunately for the bulls, as long as the stock trades below $66.40, a 25% selloff can be anticipated. MNST stock can soon erase all of 2019’s gains and then some.
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