OneWater Marine stock has been following the Elliott Wave rules quite nicely ever since the company went public in 2020. First, we spotted a complete five-wave impulse on its daily chart on January 7th, 2022, when the stock was still at $56.60. The theory states that a three-wave correction follows every impulse. So, despite ONEW’s low valuation, we thought “investors should fasten their seatbelts and prepare for a ~40% drop.“
Fast-forward to March 23rd, the stock was already down 43% to just over $35.50 a share. Interestingly, this selloff wasn’t accompanied by a deterioration in the company’s business. In fact, as OneWater ‘s sales kept growing, its valuation kept falling. Analysts unfamiliar with the Elliott Wave principle struggled to find an explanation. We, on the other hand, thought the stock can actually drop further. And the reason for our pessimism was once again rooted in the charts. The one below, shared with readers on March 25th, convinced us the bears still had room to run.
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It looked like the crash from $62.80 was only wave A of a simple A-B-C zigzag. Once it was over, waves B up and C down had to develop, in order to complete the 5-3 wave cycle. This led us to the conclusion that “OneWater stock can be expected to fall below $30 and towards the mid-$20s.” Which brings us to today and the updated chart below.
Wave A bottomed at $29.86 in late-April. Four months later, in late-August, wave B lifted the stock to nearly $44 a share. Then, the bears returned in wave C and dragged ONEW to $28.28 last week. This means the entire 5-3 wave cycle that began from $3.41 in 2020 is almost complete. Of course, wave C might keep sliding towards the 61.8% Fibonacci level near $26 first.
However, once a correction is over, the preceding trend resumes. In other words, a bullish reversal can soon be expected. The bulls should be able to lift OneWater Marine to a new record above $63 per share over the next couple of years. That is, provided that the U.S. avoids a repeat of 2008 or worse.
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