Before CPI: Three Bullish Charts and One Bearish Chart
Lede
Last week we wrote Large Upgrade to Pattern Finder; And 3 Bullish Charts where we explicitly expounded on the method to find charts in the midst of break outs by exposing our congestion, support, and resistance algorithms to the Pattern Finder screener.
Today we build on that and share three bullish charts and one bearish chart to examine.
We note that the CPI reading is out tomorrow and could throw many charts into disarray.
The Screen
Here is the bullish screen formally:
For a discussion of the screen you can revisit the prior post Large Upgrade to Pattern Finder; And 3 Bullish Charts but in general we want (i) stock trending higher, (ii) accelerating relative strength (RS), and (iii) more upside room to nearest resistance than downside room to nearest support.
Next, we move to bullish charts.
Bullish Charts
For all of the bullish charts, we know the screen is giving us what we want if the following criteria are apparent on the chart:
» Recent rising stock trend
» More room to the next point of resistance (profit zone for a swing trade) than room to the next point of support (loss zone).
» In other words, more upside than downside in the near-term.
We start with ticker AGL. Before we chart it, we can review the fundamentals quickly so we know what we’re looking at.
This is an $8.7B enterprise value company in the health services sector with strong RS, highly ranked buying strength, high revenue growth, but with negative cash from operations and a weak fundamental rating (EPS score), trading at 3.78x sales.
Now we turn to the 3-year chart. We ask Pattern Finder to turn on trending support (red line), trending resistance (green line), and congestion lines (pink lines).
We also add the 200-day simple moving average in the red line, which coincides with the nearest support.
This chart does have the requirements we set out to find. Let’s zoom in and draw in the profit and loss zones:
➼ The loss zone is nearest congestion ~$21 and it coincides with the 200-day MA.
➼ Current price is $22.99.
➼ The profit zone is nearest resistance ~$26.
➼ There is a rising trend.
Next we turn to ticker FTAI, in the finance sector. The company has a $3.44B enterprise value on large revenue growth, positive cash from operations, and a price to sales of 3.48.
Next we turn to the 3-year chart.
We note that the nearest congestion line to the upside (resistance; profit zone) is formed by the top of a recent cup, and the nearest congestion to the downside (support; loss zone) is formed by the bottom of that same cup.
And we zoom in and draw in those zones for next image.
When we draw in the loss zone, we actually extend it to trend resistance (green line).
➼ The loss zone is nearest congestion ~$23 but we go down to prior resistance which is ~22.
➼ Current price is $24.45.
➼ The profit zone is nearest resistance ~$28.
➼ There is a rising trend.
And for bullish chart number three we turn to ticker STKS.
This is a consumer services company with a $346M enterprise value, on solid revenue growth and with positive free cash flow and EPS.
Here is the 3-year chart:
And we zoom in after drawing in profit and loss zones:
➼ The loss zone is nearest congestion ~$7.90.
➼ Current price is $8.47.
➼ The profit zone is nearest resistance ~$10, although trend resistance hits at around $9.50.
➼ There is a rising trend.
Next we turn to bearish charts.
Bearish Charts
The screen for bearish charts turns the bull screen on its head and today there is just one company: CHK.
CHK is in the energy sector with the following fundamental snapshot from Pattern Finder (far more details are available on the right hand side menu):
This company has a $16.22B enterprise value, with shrinking revenue, but with positive free cashflow and a reasonable overall fundamental (‘EPS’) rating (55 out of 100)
We see a remarkably low buying strength (which translates as selling strength), a very strong 12-month RS (88 out of 100) but a very low 3-month RS (7 out of 100). This indicates worsening relative strength, with heavy selling volume.
And now we turn to the 3-year chart:
We note that the nearest upside congestion (aka resistance) is formed by the bottom of a cup. Let’s zoom in and draw in the profit and loss zones:
The stock is right at our algorithmically drawn trend support (red line), and a break below would be the trigger for a bearish trade.
➼ The loss zone is nearest upside congestion ~$90.
➼ Current price is $82.41.
➼ The profit zone is nearest downside congestion ~$67, and the trigger would be a break below trend support.
➼ There is a dropping trend.
Conclusion
This was less than 5% of the capability of Pattern Finder.
Soon Pattern Finder members will receive daily emails with trade set-ups like these, but using many more of our chart, fundamental, and relative strength tools.
We invite you to discover the benefits of Pattern Finder for yourself by visiting the page here: Learn about Pattern Finder
Thank you for your continued support and trust.