First Horizon National Corporation (NYSE:FHN), headquartered in Memphis, Tennessee, is a large bank holding company, founded in 1864, during the American Civil War. But as the last stock market crash demonstrated, even companies with such a long history are not immune to the laws of the market cycle.
Between February 2007 and July 2008, First Horizon stock plunged from as high as $37.85 to as low as $3.77. To say that it took a hard hit would be an understatement. However, the company survived that recession, too, and its stock is currently trading slightly above the $15 mark.
But if we want to see where it is most likely headed to from now on, we need to see how it has been developing decades before the 2007-2008 crash. First Horizon’s monthly log chart will come in handy.
In late 1975, the stock was hovering near 50 cents a share. Almost thirty years later, in March 2004, the stock reached an all-time high of $40.53. But to us, the most important thing is the wave structure of this phenomenal bull market.
As the chart shows, First Horizon’s uptrend took the shape of a clear five-wave impulse. According to the Elliott Wave Principle, every impulse is followed by a correction in the opposite direction. So, it is not at all surprising that the stock lost over 90% by July 2008. If this is the correct count, the 5-3 wave cycle is complete and First Horizon stock could be expected to resume its uptrend. In the very long-term, this means that the bulls should be strong enough to exceed $40.53 and reach a new all-time high. This is what Elliott Wave analysts mean, when they mention “undervalued”.