Down 9% this week, are CBA shares entering ‘a major correction cycle’?

Commonwealth Bank of Australia (ASX: CBA) shares just closed out a week to forget.

On Friday, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed the day trading for $159.40. That saw shares in Australia’s biggest bank down a painful 9.39% over the week.

This week’s sell-down also put CBA stock in the red over the full year, down 6.09% in 12 months.

Though those losses will have been partly mitigated by the $4.95 in fully-franked dividends CommBank paid eligible stockholders over this time. CBA shares trade on a 3.11% fully franked trailing dividend yield.

Why did the ASX 200 bank stock crash this week?

CBA shares closed down 10.4% on Wednesday following the release of the ASX 200 bank’s March quarter results (Q3 FY 2026).

CBA reported an unaudited quarterly cash net profit after tax (NPAT) of around $2.7 billion. While that’s a tidy figure, Q3 profits were down 1% on CBA’s first-half cash quarterly NPAT average.

Then there’s the growing uncertainty facing Australia’s economy.

“Conflict in the Middle East is disrupting critical supply chains and contributing to global uncertainty,” CBA CEO Matt Comyn said.

With the potential for increasing bad loans ahead, Comyn added, “Notwithstanding an already strong level of provisioning, we have chosen to further top up our collective provisions in the quarter to reflect heightened macroeconomic risks.”

Do CBA shares have further to fall?

Filip Tortevski, senior analyst at Wealth Within, noted that Wednesday’s biggest-ever single-day fall in CBA shares “was blamed on the latest news release, but underneath the surface, something far more serious may be unfolding”.

He said that COVID had changed everything as far as how CommBank’s shares trade.

According to Tortevski:

Since 2020, CBA’s price action has looked less like a traditional bank and more like a momentum-driven tech stock, with an aggressive surge higher that has become increasingly disconnected from the way the stock historically traded.

Tortevski pointed to similar historical patterns that saw CBA shares get walloped.

He said:

Before CBA’s two major historical corrections, the 60% collapse during the GFC and the 44% decline between 2015 and the COVID low, the stock experienced a very similar acceleration phase in the years leading up to the falls.

And he believes the current situation closely resembles these two prior topping periods.

Tortevski concluded:

That’s why this may not be just another temporary sell-off. It could be the first serious warning that CBA is entering its next major correction cycle. If history rhymes, a move back toward $95 cannot be ruled out, which would imply another potential 50% decline from the highs.

Macquarie Group Ltd (ASX: MQG) analysts aren’t quite so bearish; however, the broker lowered its price target for CBA to $114 per share.

The post Down 9% this week, are CBA shares entering ‘a major correction cycle’? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.