Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FICO Stock ‘s Triangle Pattern can Cause a 45% Plunge

Published 11/08/2022, 01:49 AM
Updated 07/09/2023, 06:31 AM

When we wrote about Fair Isaac (NYSE:FICO) a year ago, the stock had just fallen from a record of $554 to as low as ~$390, down 30% in four months. A quick look at the structure of that decline revealed that it had taken the shape of a five-wave impulse. According to the Elliott Wave theory, a correction in the other direction follows every impulse. So it made sense to expect a notable recovery to begin soon.

And begin it did. Over the following three months to February, 2022, the stock surged to $531 per share. It felt as if a new all-time high was just a matter of time. Alas, it wasn’t meant to be. The bulls suddenly lost momentum and even allowed a drop to $340 at one point in May. As of this writing, a single share can be bought for just over $435. But these numbers mean nothing unless one sees the path the price has travelled getting there. The updated chart below gives us a better perspective.

FICO Stock Daily Chart

The initial impulse mentioned above is marked 1-2-3-4-5 in wave A. The rest of the chart depicts an eerily familiar pattern, namely a triangle in wave B. Triangles are sideways-moving structures consisting of five sub-waves, labeled a-b-c-d-e. Just like after any other correction, once the triangle is over, the trend resumes in the direction of the preceding impulse.

It’s Not Just Elliott Wave Troubles for FICO Stock

Here, this means we can expect more weakness in wave C. Since wave ‘e’ is not supposed to exceed the top of wave ‘c’ of B, the bears remain on the wheel only as long as FICO stock trades below $508. On the other hand, wave C is supposed to breach the low of wave A, putting downside targets below $340 within reach.

The recent rapid increase in interest rates is virtually guaranteed to worsen credit scores across the board. This, in turn, is likely to result in less borrowing both by companies and individuals. This means less business for Fair Isaac Corp. With that in mind, we wouldn’t be surprised to see FICO stock dropping below $300 a share and towards $250 in wave C. From its current level, this translates into a roughly 45% plunge. Until then, we’ll stay away from this otherwise high-quality company’s stock.

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.