close icon

SERV Stock Gave a Warning Before Crashing 40%

The last three weeks have been tough on ServiceMaster shareholders. SERV stock was hovering around $56 a share as October went into its final third. But when the company announced its preliminary Q3 results on October 22nd, all hell broke loose.

Apparently, Wall Street didn’t like what it saw, which resulted in a swift and sharp plunge to as low as $34.77 by November 8th. Even investors who got out as soon as the bell rang on October 22nd still lost money as the market opened with a ~10% gap to the downside.

In the digital age we live in, the best time to react is usually before the news is out, not after. That is exactly what we tried to help our readers do when we published “SERV Stock Sets the Stage for a 40% Tumble” on May 31st. Of course, that material couldn’t possibly be based on information about the company’s Q3 results as it was posted nearly five months earlier. Instead, we used the chart below and the Elliott Wave principle to prepare.

SERV Stock sets the stage for a 40% tumble

SERV stock was trading close to $54 a share on the last day of May, but Elliott Wave analysts knew investors cannot afford to be complacent. The daily chart above revealed that ServiceMaster’s entire uptrend since its June 2014 IPO had formed a complete impulse.

SERV Stock Gave Investors Five Months’ Notice Before Crashing

The Elliott Wave theory states that a correction in the opposite direction follows every impulse pattern. According to this count, the support area of wave (4) near $35 was a natural bearish target. So instead of joining the bulls near all-time highs, we thought SERV stock can “tumble by roughly 40% from current levels.” Five months later that is exactly what happened.

Weak Q3 results sent SERV stock crashing 40%

The bulls managed to climb to $58.78 in wave (5) in August, but no further. The next three months brought the kind of havoc every investor hopes to never experience. From top to bottom, SERV stock lost 40.8% so far and it looks like the bears aren’t done yet.

The problem is that corrections consist of three waves while the plunge from $58.78 seems to be just one. It follows that ServiceMaster is still in pullback mode. Wave (b) up can provide some temporary relief soon, but then wave (c) should drag the share price even lower. If this count is correct, the sub-$30 area can be visited before things really start to improve.

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:

Barry Callebaut Can Drop 25% as Fourth Wave Unfolds

Barry Callebaut AG is one of the largest cocoa processors and chocolate manufacturers in the world. Formed by the 1996 merger of Callebaut and Cacao Barry, the company produces over two million tonnes of cocoa and chocolate per year. Barry Callebaut went public on the SIX Swiss Exchange in 1998 and has been quite rewarding to investors ever since.…

Read More »

Elliott Wave Correction to Drag DraftKings Down 50%

DraftKings, the popular digital sports entertainment and gaming company, went public in April, 2020. It wasn’t a normal IPO, though. The company instead merged with a blank-check company, Diamond Eagle Acquisition Corp., which listed in 2019 at $10 a share. Less than six full months later now, DKNG trades near $57 a share, down from…

Read More »

Alteryx: Can We Trust the Pre-Market Enthusiasm?

Alteryx Inc., a self-service data analytics software provider, saw its shares soar 28% in pre-market trading today. The surge was caused by the better-than-expected Q3 revenue guidance the company issued yesterday. Apparently, the news that AYX was going to make $13-15 million more in quarterly sales than anticipated was enough for investors to boost its…

Read More »

LKQ Shows How An Elliott Wave Cycle Should Look

LKQ Corporation is an auto parts provider, founded in 1998 and headquartered in Chicago, IL. Investors who bought LKQ stock at the IPO price in 2003 and held until 2018 would have multiplied their money by almost 25. On the other hand, those who bought in January 2018 are still under water as the stock…

Read More »

Qualys Stock to Fall Another 40% as Bears Persist

Qualys Inc., founded in 1999 and headquartered in Foster City, CA, provides cloud security and compliance solutions. Given the fast-growing sector the company operates in, it is no surprise that its stock has also been quite hot. At least until recently. Qualys went public at $12 a share in September 2012. Despite a couple of…

Read More »

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 »

More analyses