Featured Trade (US Stock): A corrective rebound looms for BlackRock

A corrective rebound looms for BlackRock (BLK)

Medium-term technical outlook (1-3 weeks) on BlackRock (BLK)



Key technical elements

  • BlackRock (BLK), the world’s largest asset manager with US$6.29 trillion in AUM (assets under management) as of December 2017 has been underperforming the broader U.S. stock market. Since the start of the 2018 till 23 Oct 2018, its share price has been down by a horrendous 22.54% versus a small gain of 1.66% seen in the S&P 500. A typical bear market cycle in progress for BLK after it rallied by a whopping 567% to print an all-time high of 594.52 on 23 Jan 2018 from the start of its long-term cyclical bullish trend on Mar 2009 low of 88.91
  • From an Elliot Wave/fractal analysis perspective, the on-going primary bearish trend structure from its 594.52 all-time high to yesterday, 23 Oct low of 376.31 may not be over and its share price is likely to be undergoing the primary degree impulsive down move wave A within a longer-term cycle degree corrective wave IV (a potential multi-year phase) (see weekly chart).
  • Right now, medium-term technical elements are advocating for a potential multi-week corrective rebound; wave (4) at this juncture for BLK within its primary degree impulsive down move wave A that has yet to be completed (see daily chart).
  • Yesterday’s 23 Oct decline has managed to stall right at the major ascending trendline support in place since Oct 2011 low of 137.00 and ended the U.S. session with a daily bullish reversal “Hammer” candlestick pattern. In addition, yesterday low of 376.31 also confluences with a Fibonacci projection cluster (see daily & weekly chart).
  • Momentum and volume readings also support the aforementioned corrective rebound scenario where the weekly RSI oscillator has dipped down to an extreme oversold level of 22 (an all-time oversold level since the previous level of 34 on Oct 2002) coupled with a bullish divergence signal seen in the daily Stochastic oscillator at its oversold region. The on-going steep decline from 04 Oct 2018 high has been accompanied by a significant increase in volume which represents a selling climax environment.
  • The medium-term resistances stand at 424.10/427.60 (the recent gapped down seen on 15/16 Oct after its Q3 earnings results, the pull-back resistance of the medium-term descending channel support breakdown & 23.6% Fibonacci retracement of the medium-term downtrend from 12 Mar 2018 high to 23 Oct 2018 low) and 453.60/465.20 (former medium-term swing low areas of 02/15 Aug & 38.2% Fibonacci retracement of the medium-term downtrend from 12 Mar 2018 high to 23 Oct 2018 low).

Key Levels (1 to 3 weeks)

Pivot (key support): 376.31

Resistances: 403.05 & 424.10/427.60

Next support: 336.85

Conclusion

The key medium-term support to watch for BLK will be at 376.31 for a potential corrective rebound to target the intermediate resistance of 403.05 follow by 424.10/427.60 next.

However, failure to hold at 376.31 invalidates the corrective rebound scenario to see a continuation of the impulsive down move towards the next support at 336.85 (swing low area of Oct 2016 & close to the 50% Fibonacci retracement of the long-term cyclical uptrend from Mar 2009 low to 23 Jan 2018 all-time high of 594.52).

Charts are from eSignal



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