We shared the chart above with readers just over a year ago, on May 19th, 2022. It revealed that Tyson Foods’ uptrend over the past 40+ years has produced a giant five-wave impulse. The pattern seemed complete and we labeled it I-II-III-IV-V. Wave II started in the late-1990s and took almost a decade before culminating in the 2008 Financial Crisis. Wave IV was less time-consuming, but highly interesting expanding triangle correction.
According to this count, Tyson Foods stock seemed to have reached a major top just above the $100 mark. The Elliott Wave theory states that a three-wave correction follows every impulse and usually erases its fifth wave. With that in mind, we concluded that “a drop back to the pandemic lows in the low $40s” can be expected. TSN was hovering around $87 a share at the time, so this meant a ~50% crash was on the cards.
TSN’s business model is largely recession-proof, since people still have to eat even in an economic downturn. The monthly chart, however, indicated the stock was due for a big tumble anyway. A year later now, here is how the situation unfolded.
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Fundamentally speaking, 2022 was Tyson Foods’ best year ever. Company sales grew 13.3% to an all-time high of $53.3B, accompanied by record net income and earnings per share. Given its low P/E ratio, one would’ve expected the market to propel the stock significantly higher. There are times when fundamental and technical analyses come to the same conclusion. That wasn’t one of them, though.
TSN started falling almost right away and never touched $100 again. A year later, the stock fell below the $50 mark to as low as $47.11 a share, down 53% from its record. Fortunately, Elliott Wave analysis helped us to avoid this crash. Now, with the S&P 500 on the verge of an official bull market, is the plunge over for Tyson Foods, too?
We don’t think so. Just by looking at the updated chart above, the decline from $101 to $47 looks like a single wave. The problem is that we need three for a complete correction. This means waves B up and C down have yet to develop. In other words, a short-term recovery is possible, but it is unlikely to be the end of Tyson Foods investors’ troubles.
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