Retracement Anticipated For ORLY Stock
EWM Interactive | Mar 13, 2019 07:45AM ET
In our previous article, we examined Advance Auto Parts stock through the prism of the Elliott Wave Principle. Today, we are going to take a look at another company in the same industry – O'Reilly Automotive Inc (NASDAQ:ORLY) – whose ORLY stock exceeded $394 per share last month.
But it hasn’t always been that easy for O’Reilly bulls. Less than two years ago, in July 2017, the stock fell sharply to under $170 on the back of a disappointing same-store sales guidance by the company. The stock lost 22% following the news.
Instead of losing hope, investors saw the plunge as a buying opportunity, which eventually led to the strong rally shown below.
As it often happens when you buy the bad news about otherwise strong companies, O’Reilly’s disappointment delivered very solid returns for those who had the courage to jump in. Unfortunately, no trend lasts forever.
The chart above shows that ORLY stock ‘s uptrend from $170 to $394 is a textbook five-wave impulse pattern. It is labeled 1-2-3-4-5, where the sub-waves of wave 1 are also visible and wave 4 is a triangle correction.
According to the Elliott Wave theory, a three-wave correction in the opposite direction follows every impulse. This means that instead of waiting for even more gains, O’Reilly shareholders should prepare for a notable decline to the support area near $290.
If this count is correct, the anticipated retracement can erase 20% of the company’s market value. In addition, its P/E ratio, currently at 22.3, also suggests ORLY stock is far from a bargain right now.
Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.