Breakout Charts: Pre-Earnings Optimism and Pessimism to Watch
Lede
It’s just before earnings season, so there could be some pre-earnings momentum and… some pre-earnings weakness.
Strength leaders (Relative Strength (RS) and buying volume) tend to do better right before earnings than those with recent weakness, so let’s have a look at both sides.
Bullish Charts
In our prior post we called out GOOGL as a bullish set-up at$105 and the set-up remains constructive, with the stock now over $108, and for the same reasons.
In the chart below you can see the following:
An uptrend
More room to nearest upside congestion (12.4%) than downside support (3.4%)
The stock is in between two of the bases of an ascending base.
Pattern Finder draws this all in for us, and here is the 3-year chart:
The next congestion point (upside target) would be the coincidence of the bottom of a cup and the top of the three bases that form a series called an “ascending base.”
We can zoom in:
In total, Pattern Finder shows a 12.3% upside zone to a 3.5% downside zone.
The “Bullish Charts; 3-yr Charts; Nearest Congestion or Trend” screen in Pattern Finder has several nice charts, and we pluck out ticker MANH.
The stock is in an uptrend, has been walking up support with higher lows, and has been tracing the 13-day simple moving average (SMA) higher.
The all time high would be at ~$190. Here is the chart:
And we zoom in for clarity, noting that the yellow horizontal line marks the level of the all-time high.
A similar looking chart can be seen in ticker FTNT.
The stock is walking up support of higher lows, has broken through several prior points of congestion and is now at the top - a top it has not been able to crest for the five prior times it reached this price.
Here is the chart:
With earnings season soon upon us, this stock would need that as a catalyst for a super sized move, but for the bullish risk lover - this is one for you.
Finally, we can turn to MSFT, but this time we actually turn off the PnL zones and the congestion lines (pink lines) and focus on trend support (red line) and trend resistance (green line) as well as moving averages.
The green curve is the 50-day SMA and the red curve is the 200-day SMA. The 50-day just crossed above the 200-day, and from that point, MSFT started a new uptrend:
We zoom in:
Support was formed in part by a double bottom, and now, again, into earnings season the trader can either speculate on a fresh run higher with a target at the all-time high, or…
… a failed uptrend off of earnings and perhaps even a fall to the base of that prior double bottom. Hey, it’s earnings season, gappers will happen.
For a list of stocks with recent strong buying volume, you can peruse the list of 41 stocks from the “Heavy Buying Volume” screen in Pattern Finder under the “RS, Volume, and Technicals” section of the screener.
Bearish Charts
There are some “uh, oh” charts out there, and many more will be exposed off of earnings.
Here we share some bearish charts and set-ups found through the “Pattern Breakouts” Tab and looking for stocks with breakdown below support.
We start with a community bank, ticker MVBF. The stock has tumbled from a high of $44 to now $17.76 and it just poked through trend support (red line).
For those looking to speculate on regional bank comebacks, this is about as bad of a chart as is out there, so if you’re a contrarian - here you go.
We can stay in the same sector and see another with ticker HTLF.
The stock has poked through support on a move straight down.
For a list of tickers that showed strong selling weakness recently, you can peruse the list of 33 stocks from the “Heavy Selling volume” screen in Pattern Finder under the “RS, Volume, and Technicals” section of the screener.
Conclusion
You can do this yourself inside Pattern Finder; it takes about 3 seconds per chart, if that.
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The final price of Pattern finder will rest about 5x higher than the introductory offer found on the page above - and that page locks in your low price.
Thanks for reading, friends.
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