It takes all kinds to make the stock market go round.
From heavy-handed institutional investors to small but increasingly powerful retail traders to closely followed media pundits, there is no shortage of characters in the world of investing.
The same goes for the analytical approaches that form the basis for investment decisions. Fundamental analysis involves studying a company’s financial statements, competitive advantages, and intrinsic valuation. Technical analysis approaches things from a different angle (quite literally) examining chart patterns to predict where a stock price is headed.
Here we focus on the chart lovers. Technical analysts rely on a pair of human emotions—fear and greed. They subscribe to the theory that these emotions correspond to oversold and overbought conditions that form predictable stock price patterns. Some patterns are bullish; others are bearish.
Let’s look at a few examples of U.S large cap stocks that have recently flashed bullish price patterns.
Is Ford Stock in a Bullish Reversal?
Ford Motor Company (NYSE: F) has two active bullish patterns that each popped up earlier this month. With shares of the automaker finishing lower every month in 2022, July could finally disrupt the sharp downtrend.
On July 15th, a diamond bottom was established when Ford was recording higher daily highs and lower daily lows. The pattern is created once the lows start trending higher. As the stock price breaks out of the diamond-shaped boundaries, a reversal happens. In this case, the new uptrend could send the price to the $13 to $14 range within the next few weeks.
Soon thereafter, Ford’s chart confirmed a double bottom. This classic pattern also suggests a reversal is underway and that it may climb as high as $14.40 in the near-term. The double bottom refers to the level that the stock falls to on two occasions before reversing higher in a W-shaped manner.
After the two patterns manifested, Ford ran as high as $13.14 on July 22nd but has since retreated below $13. But there’s still time for these bullish bottoms to play out.
Is Blackstone in a Double Bottom Pattern?
Alternative asset manager Blackstone Inc. (NYSE: BX) has found support around $87 on multiple occasions this summer. As a result, its daily chart has a bullish double bottom pattern of its own that points to a possible run to the $108 to $110 range by early August.
The two distinct lows in a double bottom can be interpreted as 1) weakened selling pressure and 2) strengthened buying activity. In other words, fewer investors are selling the stock near the bottom and more buyers are lining up to get what they perceive to be an oversold stock.
In Blackstone’s case, the double bottom packs a bigger punch because of the spacing of the two bottom points. When the dips to the same level occur further apart, this lends credence to the floor and improves the chances of a successful reversal. Blackstone’s declines are about a month apart—with arguably a third matching decline in between that would mark an even more convincing ‘triple bottom’.
It wasn’t long ago that Blackstone was a $150 stock but as with other capital markets companies, the bear market caused a major correction. However, with the business in good health and the private equity space gaining popularity, a high volume breakout from this base could spark a run back to record highs.
Will Enterprise Products Partners Stock Go Up?
Enterprise Products Partners L.P. (NYSE:EPD) has risen steadily since a pair of bullish technical patterns formed earlier this month. If they continue to play out according to design, shares of the midstream energy company could hit $30 by mid-August.
A continuation wedge got things started on July 7th after Enterprise Products dipped below $23 for the first time since March 2022. The bullish continuation wedge occurs when an uptrend is temporarily interrupted before eventually moving ahead. It marks a period when the bears try to wrangle control of a stock but are overpowered by the bulls. The wedge formed by two converging trend lines is broken through and the uptrend resumes. For Enterprise Products, the pattern was about four months in the making and targets a run to at least $29.
The stock stumbled soon after the continuation wedge formed but another pattern emerged to save the day and support the uptrend. This was a July 19th double bottom from which the stock has not looked back. On July 26th, Enterprise Products appropriately traded around $26—and with two technical patterns in its favor, appears to have its sights set on $30.