The Blackrock (NYSE:BLK) stock provides a great example of how market cycles lead to massive bull runs and harsh corrections. Every long bull market will eventually lead to a correction. However, it's always important to estimate how long such a correction will last.
Unbeknownst to many investors, shares of Blackrock are down more than -31% since the last high at $973.16 in November 2021. The stock value of one of the most powerful companies globally has declined by more than 40 billion. This is a development that investors should pay attention to.
After years of ultra-loose monetary policy by the Federal Reserve, Chairman Jerome Powell has now announced a change in their policy for the next years. The first big step of this was the interest rate increase from 0.25% to 0.5%, in the course of which the U.S. dollar strengthened immensely, and since then, many U.S. stocks have been taking heavy losses.
But that's not all. Jerome Powell has already hinted at the prospect of another interest rate hike. This change will be groundbreaking for the international markets and will strongly influence the future of the stock markets.
At the moment, it remains difficult to estimate the fluctuations of the coming months. What is certain, however, is that investors should continue to expect higher inflation and further policy changes from the FED. In an interview, Black strategist Tony Despirito said that the coming months and years could easily continue to bring 3%-4% inflation.
All of these factors are putting pressure on Blackrock's business. The current losses on the world's stock markets have not left them unscathed. With almost $9.6 trillion in assets under management, Blackrock has been hit hard by the ongoing uncertainty.
We are confident that, despite the Corona crisis, the Ukraine war, or other uncertainties, Blackrock will only increase its power in the future. With the world's largest banks and the smartest minds at its side, Blackrock will survive this crisis and emerge from it even stronger.
We think that Blackrock will be one of the best investments as soon as the big correction in wave (II) is over.
Technical View
Blackrock stock has prospered amazingly since its IPO in 1999 and has established itself as an extremely valuable company. The price history is characterized by long rallies and short and severe crises. The blue cycle waves (I / II / III / IV / V) highlighted in the chart mark the five main directions the share has passed.
Since its IPO, the company was able to grow for almost ten years until the financial crisis happened in 2008 and caused the share price to plummet by more than -65%. These are waves I and II. According to the Elliot waves, this so-called "wave 1-2 setup" is followed by an impulsive wave III.
This wave III exceeded everyone's expectations, and in the next 11 years, the stock rose more than +560%. In 2018, the bullish momentum was finally exhausted, and a wave IV had the stock in its grip for a long time.
The Corona crisis caused the share price to crash massively, but it bounced back just as quickly. For the last two years, the stock was again in a massive bull market, ending its nearly 22-year bull market at exactly $973.16.
Since this all-time high, Blackrock is now in a hard correction, and we expect the price to continue to fall. In the context of a large ABC correction, the price will very likely be thrown back into the area of $370.
According to the Elliot wave theory, this price target may cause much irritation among investors, but this development is very likely. The long-term indicators also support this downward movement.
The sell volume of the MACD and the decline of the RSI were marked. For the time being, we assume that this development will continue. In the future, we will publish further analysis on Blackrock and are curious about what the future will bring.