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3M Stock: Another Elliott Wave Reason For Skepticism

Published 11/11/2018, 07:45 AM
Updated 07/09/2023, 06:31 AM

2018 has not been very kind to 3M (NYSE:MMM) stock investors. The share price was hovering in the vicinity of $260 in January. Fast-forward to October 26th , it was down to $181.98 for a 30% plunge in just ten months.

Now let’s take a look at the 4-hour chart of 3M stock, which we shared with you on June 22nd, and see how the Elliott Wave Principle helped us stay ahead of recent developments.
3M Company NYSE : MMM 4 Hour Chart
Five months ago, MMM was still holding above $195 a share. The decline from $260 looked like a five-wave impulse, whose wave (5) was poised to make a new low and complete wave A/I. A three-wave correction in the other direction was then supposed to lift 3M stock to roughly $220 in wave B/II, before the bears return in wave C/III. The updated chart below shows how things went.
3M Stock Elliott Wave Chart
As expected, 3M stock made a new low at $190.57, then rose to $217.87 and plunged again to $181.98. In other words, the Wave principle managed to put us ahead of not one, not two, but three consecutive moves in MMM stock. Good.

3M Stock Demands a New Elliott Wave Count

However, it turns out that none of the three was labeled correctly. The drop to $190.57 was supposed to be wave (5), but only had three sub-waves. The recovery to $217.87 was supposed to be wave B/II, but was actually an ending diagonal. Which leads us to the conclusion that the selloff to $181.98 wasn’t wave C/III either.

The new labeling we’d like to propose suggests the entire decline from $260 to $182 is a five-wave impulse in wave A/I. Waves (2) and (4) obey the guideline of alternation as wave (2) is a sharp rally, while wave (4) is an expanding flat correction. The five sub-waves of (3) and (5) are clearly visible, as well.

This makes us think the current jump from $181.98 to $204.27 so far is the beginning of wave B/II. The same logic applies here. A three-wave rally to the resistance of wave (4) near $220 can be expected, followed by another selloff to $180 or lower.

In conclusion, an impulsive decline indicates 3M stock has entered a downtrend. Lower levels can be expected in the long-term. The short-term outlook should provide investors with another chance to evacuate near $220 a share.

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