close icon

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either.

YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared investors. Between late-July 2019 and March 2020, Yum! fell from $120 to $55, losing 54% in less than a year.

However, as it often happens in the markets, the stock started recovering even before there was a solution to the crisis. Yesterday, Yum! closed at $91 a share, up 65% from the March low. What interests us is the Elliott Wave structure of this recovery. Let’s take a look at it below.

Yum! stock aims to form a bullish Elliott Wave pattern

Yum!’s 4-hour chart reveals that the rally from $55 to $98 is a clear five-wave impulse pattern. It is labeled 1-2-3-4-5 and means that once the current correction is over, more strength can be expected. The question is what is left of it then?

Yum! Bears Have Job to Do, before the Bulls Take Over

Corrections usually consist of three waves. The most common shape they take is the simple A-B-C zigzag. That is what we believe is now unfolding in Yum! stock. The decline to $84 in June must be wave A, followed by a recovery to $95.44 in wave B last month.

If this count is correct, wave C needs to complete the whole 5-3 wave cycle before the uptrend resumes. In most cases, C-waves breach the end of the corresponding A-wave. In addition, the support area of wave 4 is a natural target for the bears from here. This means a decline to $80-$75 is likely to occur before the bulls return. Once they do, targets above $100 a share would make sense.

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:

LKQ Stock On the Verge of Doubling Yet Again

The first and only time we wrote about LKQ Corporation was in late-September, 2020. The stock had just doubled from its coronavirus plunge and was hovering around $27. Despite the recent strength, however, we thought the shares still present a good investment. In a time of crisis one cannot rely on charts alone, so the…

Read More »

Tencent to Start Rising Amid China’s Tech Crackdown

Stocks of China’s tech giants have been falling for months as the country’s crackdown on the industry spooked investors. After Alibaba was slapped with the biggest antitrust fine in China’s history, risks increased that regulators are not done with Tencent despite its own $1.5B fine. As a result, the stock fell from its February 2021…

Read More »

Tesla ‘s Bubble Appears to Be Bursting at Last

Our previous article about Tesla stock, published November 17th, 2020, called for a surge to ~$600, followed by a major bearish reversal. We thought TSLA was then rising in wave 5. A new all-time high was supposed to occur, but since fifth waves conclude every impulse, we opined the bears would be eager to return.…

Read More »

Etsy Aims for $300 Before Bears Cut the Stock in Half

The last time we wrote about Etsy was on January 18th, 2019. The stock was trading close to $54 a share and was up a staggering 803% from its January 2016 low. Etsy’s profits could not possibly justify its then $6.6B market cap, but with sales growing so rapidly, some people were already comparing it…

Read More »

NovoCure to Shed Another 40% After Today’s 15%

Founded in 2000, NovoCure develops treatment for tumors using specific frequencies to disrupt cancer cell division. The company went public in 2015 and, after a disappointing 2016, has been making investors very happy ever since. On the other hand, the stock is down over 15% today despite positive TTFields liver cancer study results. Normally, an…

Read More »

Essex Property to Lose Half After Reaching New Record

Essex Property saw its stock price drop to as low as $176 during 2020’s Covid selloff. From the October 2019 all-time high of $334, that was a 47.3% total decline in less than five months. Fast-forward to today, it feels as if 2020 was just a bad dream. The stock is hovering around $307 right…

Read More »

Cathie Wood’s ARK to Add 40% Before Turning South

In the twelve months between the Covid crash bottom in March 2020 and February 2021, the ARK Innovation ETF returned 385%. Bold bets on disruptive and promising, yet still money-losing companies turned fund manager Cathie Wood into an investing superstar. However, after the fund’s staggering surge from just $33 to nearly $160 a share, it…

Read More »

More analyses