In July last year we wrote an Elliott Wave analysis highlighting the possibility of a notable 40%+ correction in Moody’s stock. Seven months later now, the share price is little changed and the negative outlook remains valid. Today, we are going to examine Moody’s major rival – S&P Global Inc.
S&P Global is a ratings agency, benchmarks and data provider with an incredibly sound business model and a $78B market cap. The company is in the process of acquiring IHS Markit for roughly $44B, but that is another matter. What worries us is that SPGI’s weekly chart shows a pattern very similar to the one we found in Moody’s last year. Take a look.
Starting from the mid-1990s, S&P Global seems to have drawn a complete five-wave impulse. The pattern is labeled I-II-III-IV-V, where wave II occurred during the 2008 Financial Crisis. Wave III was a real delight to anyone smart or lucky enough to ride most of it. Its five sub-waves are also visible and marked 1-2-3-4-5.
Moody’s and S&P Global to Fall in Tandem
The coronavirus selloff in March 2020 put wave IV into place and sat the stage for a new high in wave V. The fact that wave IV ended shortly after touching the 38.2% Fibonacci level supports the idea that the following surge is a fifth wave.
According to the theory, a three-wave correction follows every impulse. If the count above is correct, we can expect a major decline in S&P Global stock to erase the entire wave V. A drop to the support area of wave IV near $200 – $170 makes sense. It would be an excellent opportunity to invest in this growing, profitable, wide-moat business.
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!