close icon

Mondi Group: Little Known Firm, Well Known Pattern

Even Mondi Group themselves acknowledge that not too many people have heard their name. “Our name may not be familiar to the public, but our products are” is written on the second page of the company’s 2018 annual report.

Mondi, listed on the London Stock Exchange, is a global paper and packaging company, headquartered in the United Kingdom. It has a market cap of roughly $8.2 billion, down from the $10.9 billion valuation reached in August 2018.

And while the company may be little known, the Elliott Wave pattern visible on its weekly chart is quite famous. It also helps explain the recent 24% drop in the stock price.

Mondi stock draws a textbook Elliott Wave pattern

Mondi stock fell to as low as 118 pence per share in March 2009. In August 2018 it reached 2250 for a total return of over 1800% in less than 10 years. From an analyst’s point of view, the structure of this impressive rally is even more important than its size.

The stock price drew a textbook five-wave impulse pattern on its way up, labeled (1)-(2)-(3)-(4)-(5). Wave (1) is the extended one, but wave (3) is still longer than wave (5), so there is no violation of the Elliott Wave rules. The sub-waves of waves (1), (3) and even wave 3 of (1) are clearly visible, as well.

Mondi Stock Remains Vulnerable

Unfortunately for the bulls, the theory states that a three-wave correction follows every impulse. That is what we believe has been in progress since the August 2018 top. The selloff from 2250 to 1558 fits into the position of wave (a) of a simple (a)-(b)-(c) zigzag retracement, which is still in progress. If this count is correct, we can soon expect a small recovery in wave “c” of (b), followed by another decline in wave (c) towards the 1300 – 1200 support area.

Mondi has been able to post very strong business results in recent years. However, in the highly cyclical basic materials sector the company competes in strong results are rarely sustainable for very long. The Elliott Wave principle suggests the stock can still lose another ~25% before things start to improve for shareholders.

Did you like this analysis? 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!



Stay informed with our newsletter

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

Privacy policy
You may also like:

Alphabet Stock To $1700 and… Below?

Similarly to the market at large, Alphabet stock felt the tremors caused by the coronavirus panic. The Google parent’s share price fell from $1531 to $1009 between February 19th and March 23rd. One of the biggest and strongest companies in the world lost 34% of its value in a little over a month. However, thanks…

Read More »

Sidestepping the 55% Crash in Steel Dynamics Stock

It’s been a little over four months since we wrote about Steel Dynamics. On January 16th, the stock was hovering around $33 a share. The price was down 37% from its May 2018 peak at $52.10. Yet, despite the reduced price, we thought investors would be better off avoiding the name. Our bearish opinion was…

Read More »

Omnicom Bears Face Strong Fibonacci Support

Yesterday, we talked about Interpublic and how Elliott Wave analysis warned us about its stock’s collapse two years in advance. Today, we are going to focus on Omnicom, which looked vulnerable to us in March 2018, as well. Omnicom rose from $20.09 to $89.66 between March 2009 and December 2016. The stock took full advantage…

Read More »

Two Years Ahead of Interpublic ‘s 55% Collapse

Interpublic and Omnicom used to be the giants of the advertising world. In the old economy, their competitive advantages seemed indestructible. Then, the Internet revolution came along and Facebook and Google created a lot of problems. However, their stocks were still making new highs until two years ago. Interpublic stock, for instance, was hovering around…

Read More »

Nestle Set to Complete a Pattern it Started in 2003

Nestle S.A. is one of the largest companies in the world and the biggest food and drink producer by revenue. The company is headquartered in Switzerland and went public in 2001. The stock’s all-time low was reached in March 2003, when it fell to CHF 23.32 a share. Seventeen years later now, Nestle stock is…

Read More »

Bulls to Lift Mondi Stock to New Highs

We first wrote about Mondi plc, the paper and packaging company, almost a year ago. On May 5th, 2019, the stock was hovering above 1700 pence per share. Despite being down 25% from its all-time high already, we thought it was too early for investors to buy the dip. Our pessimism was based not on…

Read More »

Rapid7 ‘s Rapid Decline Plants the Seeds of a Rally

Eight months ago we made a case that Rapid7 investors should not expect the future to resemble the past. The stock was up 492% since February 2016 and was hovering above $53.50 in August, 2019. Without a doubt, the cyber-security industry was and still is enjoying a strong tailwind. However, Rapid7’s daily chart revealed a…

Read More »

More analyses