Megacable Holdings (MX:MEGACPO) engages in the provision of telecom services to 250 cities in 25 states in Mexico. Headquartered in Guadalajara, the company was founded in 1982, but did not go public before late-2007. Listing on a public market in 2007 practically guaranteed terrible stock performance over the next year or so during the global Financial Crisis.
And indeed, the stock fell from its 2007 high of MXN 39.49 to as low as MXN 11 by October 2008. Thirteen years later now, it closed just below MXN 60 (US$2.90) last week, following a decline from its 2018 top of MXN 102. As always, “what to expect from here?” is the only question that matters. Let’s see if Megacable ‘s weekly Elliott Wave chart can help us find the answer.
The chart reveals that the uptrend from the 2008 bottom to the top ten years later is a textbook impulse pattern. It is labeled I-II-III-IV-V, where the five sub-waves of all three motive waves are visible, as well. In the case of wave III, we can even count five waves within its wave 3.
Megacable To Fall Another 25% Before Bouncing Back
This means the decline we’ve been witnessing since October 2018, must be the natural corrective phase of the cycle. It seems to be developing as a simple A-B-C zigzag. Wave C is supposed to breach the bottom of wave A, making a drop below MXN (US$2.65) a share look very likely. Ideally, the bears would drag the price down to the 61.8% Fibonacci level near MXN 45.
Once there, the 13-year Elliott Wave cycle would be complete. Then, the bulls should finally return and eventually lift Megacable to a new record in the long-term. Investors satisfied with doubling their money in five years’ time (15% CAGR) should view this drop as a buying opportunity.