Social distancing measures in response to the coronavirus pandemic forced the global economy to grind to a halt. Among the many sectors that are now suffering, travel was probably hit the hardest. The market quickly reflected the new reality, punishing airline, restaurant and retail stocks. Booking (NASDAQ:BKNG), the leading player in the online travel industry, dived too.
BKNG fell to $1107 a share on March 23rd, but in reality, the stock has been trending lower for over two years. And while the industry won’t return to business as usual for a while, Booking remains a high-quality company. People will travel again one day and the current selloff is a great buying opportunity. So let’s see what is left of it on the Elliott Wave chart below.
Booking was clearly in an uptrend prior to March 2018 when it hit a record high of $2228. Therefore, the following weakness must be some kind of a three-wave retracement. Judging from the chart above, it is a regular A-B-C flat correction.
Wave A is a (w)-(x)-(y) double zigzag, while wave B is a simple (a)-(b)-(c) zigzag. Wave (c) of B is an expanding ending diagonal. It follows that the COVID-19 selloff must be a five-wave impulse in wave C. So far, we can see waves 1, 2, 3 and 4, which means wave 5 remains.
Wave 4 reached the 38.2% Fibonacci level yesterday, where fourth waves usually terminate. If this count is correct, the bears should be able to drag Booking stock to roughly $1000 a share in wave 5 of C. A major bullish reversal should then be expected in that area.
It will take some time for Booking and the travel industry as a whole to recover. However, long-term investors should take advantage near the point of maximum pessimism. Waiting for things to improve first would inevitably mean paying a higher price.