Why, Oh Why Did WY Soar to Record Highs in April?
See what Elliott wave pattern helped anticipate Weyerhaeuser's “unexpected” comeback
by Nico Isaac
Updated: April 27, 2021
The chart below rewinds the clock all the way back to May 2020 on a venerable Big Board stock, global timberland producer and real estate investment trust, Weyerhaeuser Company (ticker symbol WY).
Put yourself in the shoes of an investor in this stock -- at that time, that is. It's May 2020. The world is but two months into the worst pandemics in centuries. The global economy has come to a crashing halt and with it, the future of real estate seems doomed.
It's no surprise that at the time, the mainstream consensus about companies associated with the constructing, buying, and selling of property was terminal. One May 6 industry report described the total loss of optimism surrounding the timber business and said: "The coronavirus hit and housing gets absolutely crushed" (AgAlert, May 6 2020).
On May 1, 2020, Motley Fool described a single-day bloodbath in Weyerhaeuser and wrote:
"WY plunged 15% in a matter of seconds... Any company's cutting its dividend is unwelcome, but a REIT's doing so is particularly bad since the REIT structure was created specifically to pass income on to shareholders."
And finally, a famous Real Money talking head expressed his shock over WY's dividend suspension in a May 4 article:
"It was totally draw-dropping. Weyerhaeuser's bread and butter is housing, so this next part is suitable epitaph to the dividend: 'We're expecting a significant erosion in housing and residential construction...' It may get worse for a while."
And now, for a different view of the situation -- expressed around the same time.
On May 26, 2020, Elliott Wave International's Trader's Classroom editor Jeffrey Kennedy showed subscribers this bullish chart of Weyerhaeuser:
Why was Trader's Classroom turning bullish when the rest of the world all but wrote WY off?
Because the decline in WY had a signature look of an Elliott wave correction, and it was likely complete. In wave terms, it was a "zigzag," which in a bull market is a simple three-wave declining pattern labeled A-B-C -- as you see in the chart above.
Zigzags are countertrend moves, and signify a temporary break in the larger trend. The significance of WY's completion of this countertrend move was clear: The stock was headed for a powerful rebound.
Press play to listen to Jeffrey Kennedy's analysis of WY from his May 26, 2020 Trader's Classroom video lesson:
You heard that right: Jeffrey called for a "new bull market in Weyerhaeuser" while much of the mainstream focus was on the stock's downside.
The next chart captures what followed: WY indeed caught a powerful upwind and rode the current to its highest price level in its 121-year history.
Today, here's how an April 22 Yahoo Finance article described the shock over WY's "unexpected "comeback:
"Weyerhaeuser (NYSE: WY), one of the largest private owners of timberland worldwide, watched its stock lose more than half its value in the blink of an eye at the onset of the pandemic.
"Investors feared that the pandemic would cause housing -- and by extension lumber -- demand to tank. So, they rushed for the exits.
"To say those fears have been unrealized would be an understatement."
Elliott wave analysis offers you an independent way to view market trends; one that isn't tied to ever-fluctuating news stories but rather the objective Elliott wave patterns.
Elliott Wave International's Trader's Classroom brings subscribers new lessons 3 times a week, often with a built-in opportunity like the one you just saw. Subscribe now and see what opportunities are on our "Act Now" list today.
Don't ask WY… Ask where’s the next big stock opportunity?
This story about Weyerhaeuser Company proves one thing: If the news-driven model of market forecasting doesn't fit -- stop wearing it!
There's a better alternative: Elliott wave analysis.
Right now, Elliott Wave International's Trader's Classroom editor Jeffrey Kennedy puts his 25-plus years of Elliott expertise to the challenge of finding price charts that offer high-confidence, trade setups.
Subscribe now and see what opportunities are on his "Act Now" list today.
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