Vera to follow XBI lower in wave 4Using Elliot Wave theory, we’re able to see that VERA has been in wave 3 since November of 2023. This move became overdone in the last month when VERA blew past all analyst estimates (average price target in the high 20s). VERA seems to be following XBI lower in a short term correction that started at the end of Feb. More context on the theory behind the downtrend below.
From an Elliot Wave TA perspective, wave 4 should correct to the .382 fib level of the 3rd wave which should land around $34-35. This would take us to the bottom of the trend channel to complete wave 4. It’s possible we bounce off the top of the base channel in the high 20s but that would be a lower probability given the momentum in this stock.
Context for this setup: It is my opinion that much of the hype in the biotech space has been driven by multiple expansion and hopes of Fed rate cuts more than anything else. Financial analyst and economist Jim Bianco correctly points out that inflationary pressures could give the Fed pause over the next few months. If they don’t cut in June or July then it’s unlikely they cut at all headed into the election per the history of Fed policy moves. This means no rate cuts in 2024. It’s not so far fetched of an idea and markets are not prepared for tightening financial conditions. This is where you get a wave 4 in VERA.
