Today, we’re focusing on the patterns.
With the SPX closing above 6,100, the potential cup and handle pattern we’ve been watching officially was triggered – target 6,425.
As is always the case, the initial breakout is tentative, with a follow through being needed to keep it alive. And as long as it does remain alive, though, the upside objective will remain in place. That makes three live bullish patterns, with the prior two getting triggered in September and January, respectively, and their breakout zones both holding up to this point.
Since October’23, we’ve now had 15 bullish formations triggered. Eleven times the SPX achieved its upside target. As just discussed, above, three now are live, meaning only one bullish formation got negated. That was the small cup and handle pattern that got triggered on 11/29 but two weeks later, as the mid-December swoon occurred, it was nullified. While that was discouraging, the ensuing volatility created the low point of many bullish patterns that now have taken shape like we’re seeing in the SPX.
Thus, the SPX remains above the bullish falling wedge pattern breakout zone (target 6,290).
The cup and handle pattern also remains intact, with a target of 6,180…
Yesterday’s move also pulled the SPX above the latest channel. While we also could measure the move from this breakout, we’re using this chart more as a gauge like we do with the trading boxes. Continued breakouts = an uptrend.
Potential Patterns
Speaking of the trading boxes, here’s the chart derived from Trading View that we first shared this past Tuesday. With the SPX still below its early January high, we’re still waiting for the latest box breakout to occur.
Lastly, this cup and handle pattern version has not been triggered either, given that its upward sloping neckline remains above current levels. If/when this breakout happens, the resulting upside objective would be higher than the first cup/handle, as well. We won’t list both pattern breakouts on the sheet simultaneously if this ends up working given how similar they are, but a sustained move above the resistance line will be noteworthy.
Chart Trades
As discussed above, more and more stocks have been completing bullish chart patterns, while others are close to doing so. There suddenly are a bunch of constructive formations to choose from. One of those is QCOM… Premium CappThesis clients received six additional chart trade ideas pre-market today.
At the end is a follow up note on AMZN, which we discussed last Friday.
When we hear about semiconductors these days, QCOM isn’t the first stock that comes to mind. Indeed, it last made a new high back in June’24, which now suddenly is nine months ago. The SMH ETF, itself, last made a new high in July. The REAL difference is that SMH is 12% away from its all-time high; however, QCOM is 35% from its former high.
QCOM
Of course, all of that is just noise because we care about its chart first and foremost, and QCOM’s chart has begun to look technically attractive over the last few weeks. It came roaring back after finally bottoming in late December, and now, after pausing the last few weeks, it’s close to completing a potential four-month inverse H&S pattern.
It still has some work to do, but a breakout through the cited neckline would target 204. The stock’s 200-DMA in red has completely flat-lined in recent months and is at the same price level as the stock, itself. Punching through both lines would be a big accomplishment.
Also of note, the stock’s 61.8% Fibonacci retracement level of the entire decline is just below that area near 200 (not pictured).
Update – AMZN
Last Friday, we discussed how AMZN has done very well post-reporting earnings over the last year and change. Here’s how that chart looks now. It remains within striking distance of its recent all-time highs.
Further, as most of you know, I’m a CNBC Pro contributor, and my piece this Wednesday was an expanded write-up on AMZN. Here’s the link that Pro subscribers can access.
Below is some of that additional commentary regarding the very long-term chart:
“AMZN, of course, is one of the biggest companies in the world. And over the last 25 years, it has been one of the best-performing stocks in the world, as well. However, AMZN has endured periods of underperformance along the way.
Recently, the stock was net flat from August’21 to October’24. It finally cleared that last high this past November. So, while the stock has been rallying since the January’23 low, it’s only four months removed from breaking out of a multi-year bullish pattern.
As the long-term chart shows, once AMZN powered through prior multi-month (or multi-year) digestive phases, the ensuing extensions sometimes lasted much longer.”
Lastly, this table recently was shared by Seth Golden of Fenom Group on X, which is bullish for AMZN in 2025. While we don’t rely on studies like this, we don’t ignore them either – especially when the numbers and charts both are bullish.
