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OLED Stock Bulls Living on Borrowed Time

Universal Display Corporation is engaged in the research, development and commercialization of OLED technologies, which explains why its stock symbol on the NASDAQ exchange is OLED, even though it has nothing to do with the company’s actual name. OLED stock climbed to an all-time high of $209 per share in January, 2018. Unfortunately, the rest of the year could not keep the bullish promise, which led to a 62% decline to $78.75 by late-June.

OLED stock closed at $119 a share yesterday, up over 50% from the June bottom. Is this recovery the beginning of a larger uptrend or just a bull trap investors should avoid? That is the question we hope the Elliott Wave Principle will help us find the answer to.
OLED stock Elliott wave chart
The 4-hour chart above reveals a troubling picture. It shows that the decline from $209 to $78.75 is a textbook five-wave impulse, labeled 1-2-3-4-5. Impulses point in the direction of the larger trend, which means OLED stock’s drop this year was just the first phase of a larger bear market. According to the theory, every impulse is followed by a three-wave correction in the opposite direction before the trend resumes. That is what we believe has been under construction since the bottom at $78.75 – a simple A-B-C zigzag correction.

After a 50%+ recovery it may seem the bulls are back for good, but if this count is correct, Universal Display‘s woes are far from over. Once wave (2/B) ends, probably in the area between $140 and $160, another massive decline should occur in wave (3/C) and drag OLED stock to a new low under the $70 mark. So don’t worry if you didn’t join the bulls below $100. They are living on borrowed time.

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