close icon

Moody’s Stock to Give Investors a Chance to Evacuate

The stock market at large is crashing and even stocks owned by superinvestors like Warren Buffett are not immune to sharp selloffs. One such stock is Moody’s. As of September 30th, Berkshire Hathaway owns approximately 24 670 000 Moody’s shares, making it the 8th largest position in the portfolio.

Moody’s reached an all-time high of $187.98 in July, but closed below $137 per share yesterday for a total loss of 27% in just five months. Experienced long-term investors usually take advantage of such notable pullbacks to add to their positions in companies they like. Moody’s Corporation is certainly a great company, but is this decline a buying opportunity or the beginning of a larger selloff? Let’s hear what the Elliott Wave Principle can tell us.
Moody's stock Elliott Wave price chart
The 4-hour chart of MCO stock reveals the structure of the decline from roughly $188 a share. As visible, it can be seen as a textbook five-wave impulse, labeled 1-2-3-4-5, which has been developing between the parallel lines of a trend channel. The 61.8% Fibonacci level discouraged the bulls in wave 2, while wave 4 slightly breached the 50% retracement level of wave 3.

According to the Wave theory, a three-wave correction in the other direction follows every impulse. We believe wave 5 is now in progress and it looks like the price is aiming at the support near $130. It is in that area where a bullish reversal for the start of wave B up can be expected. Another reason not to be overly bearish on Moody’s stock right now is the MACD indicator. It shows a strong bullish divergence between waves 3 and 5 of A.

So if this count is correct, we can prepare for a notable recovery in Moody’s stock. The resistance of wave 4 near $160 a share is a natural target for the bulls in wave B. Once there, however, the 5-3 wave cycle from the top at $188 would be complete and another selloff in wave C should be expected.

In conclusion, the bears seem to be losing momentum already. A short-term recovery to roughly $160 can soon begin, but before a real long-term investing opportunity occurs, wave C would need to drag the stock price below the bottom of wave A. Do not be surprised to see Moody’s stock falling to double digits in 2019.

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:

Electronic Arts Can Lose 50% in Elliott Wave Correction

Electronic Arts hasn’t been able to reach a new all-time high since July 2018, when it climbed to $151.26. However, the stock came close to that last month after the coronavirus panic in March was quickly forgotten. Currently near $127 a share, Electronic Arts holds a rather high valuation at 29 times its expected fiscal…

Read More »

Buffett’s DaVita Stock Looks Like a Bull Trap

Formerly known as DaVita HealthCare Partners Inc., DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease. It was founded in 1994 and went public a year later. As of this writing DaVita’s market cap is close to $10.7 billion. The interesting part is that it is…

Read More »

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.…

Read More »

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either. YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared…

Read More »

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

More analyses