Hibbett Sports stock was trading above $68 per share for a while in December, 2013. Today, less than four years later, you could buy in for under $16. At one point last week, Hibbett was down by 81% from its all-time high. Such a severe crash could fill with doubts even the most devoted of shareholders. As if there is no light at the end of the tunnel and the stock is simply going to zero. Well, if that is what you have been thinking, the Elliott Wave Principle has some good news for you. As the chart below shows, Hibbett’s shoes might start shining again soon.
The logarithmic chart of HIBB stock allows us to recognize a complete five-wave impulse between January 1997 and December 2013, which has been developing within the parallel lines of a perfect trend channel. The sub-waves of waves III and V are also clearly visible. Just as the theory postulates, the impulsive pattern was followed by a retracement of similar magnitude, which erased almost all of the gains achieved by wave V. And that is precisely why we believe this stock has great upside potential. Corrections usually retrace back to the area of previous fourth waves. Here, Hibbett has already fallen to the support zone of wave IV of (I), which makes us think the negative phase of the wave cycle – wave (II) – is either over or near completion and the bulls should soon return. If this is the correct count, this is a long-term buying opportunity with a great risk/reward ratio. While Hibbett cannot fall below zero, the Wave Principle suggests it could trade near $70 a share again in some years’ time. Patience is key.