The company’s weekly chart showed that an uptrend from $ 16.38 in 1999 took the form of a clear five-wave impulse. We marked it (1) – (2) – (3) – (4) – (5), where both (1) and (3) subwaves were also visible. Two corrective waves – (2) and (4) – returned to the Fibonacci levels of 61.8% and 38.2%, respectively. The analysis made us believe that wave (5) was continuing. Unfortunately for Lockheed investors, the Elliott Wave Principle states that a three-wave correction follows every impulse. So, we concluded that “a bearish reversal could soon occur, followed by a 40-50% fall over the next few years.” The bulls managed to add another $ 73 to Lockheed’s price per share by February 2020. Then, COVID-19 hit. In just a month during the coronavirus sale, LMT shares fell 40% from $ 443 to $ 266 per share. This drop was sharp and quick, but still too small for us to conclude that the correction is over. In addition, the structure of the subsequent recovery to $ 418 by June 2020 looks corrective. If this count is correct, the March fall should be designated as wave (a) of a simple (a) – (b) – © zigzag that is still unfolding. The rally towards $ 418 should be wave (b), which means wave © can be expected to pull Lockheed down again. Wave © is expected to break through the bottom of wave (a), making bearish targets around $ 240 likely. This means another 30% decline to support wave (4) before the bulls can return. Lockheed can be a great stock to buy and hold over the long term. However, we think that investors can get a much better price if they wait a few more months.
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