All kinds are needed to keep the stock market running.
From heavy-handed institutional investors to small but increasingly powerful retailers to close-knit 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) by examining chart patterns to predict where a stock price is headed.
Here we focus on the map lovers. Technical analysts rely on a few 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 take a look at a few examples of US large cap stocks that have recently exhibited bullish price patterns.
Is Ford Stock in a Bullish Turnaround?
Ford Motor Company (NYSE: F) has two active bullish patterns that emerged earlier this month. With the automaker’s stock ending lower each month in 2022, July could finally disrupt the sharp downtrend.
A diamond on July 15th bottom was founded when Ford recorded higher daily highs and lower daily lows. The pattern is created as the lows start to get higher. If the stock price breaks out of the diamond-shaped boundaries, a reversal takes place. In this case, the new uptrend could send the price towards the $13 to $14 range within the next few weeks.
Shortly thereafter, Ford’s chart confirmed a double bottom. This classic pattern also suggests that a reversal is underway and could rise as high as $14.40 in the near term. The double bottom refers to the level where the stock falls twice before falling back higher in a W-shaped fashion.
After the two patterns manifested, Ford was up $13.14 on July 22, but has since fallen below $13. But there is 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 several times this summer. As a result, the daily chart has its own bullish double-bottom pattern pointing to a possible run into the $108 to $110 range in early August.
The two clear lows in a double bottom can be interpreted as 1) reduced selling pressure and 2) increased buying activity. In other words, fewer investors are selling the stock on the downside and more buyers lining up to get what they consider to be an oversold stock.
In the case of Blackstone, the double bottom has a greater impact due to the distance between the two bottom points. When the declines to the same level are further apart, it gives credibility to the floor and increases 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 hasn’t been that long since black stone was a $150 stock, but as with other capital market companies, the bear market caused a major correction. However, with the company in good health and the private equity space gaining popularity, a major breakout from this base could lead to a return to record highs.
Will Enterprise Products Partners’ inventory increase?
Enterprise Products Partners LP (NYSE:EPD) has risen steadily since some bullish technical patterns formed earlier this month. If they continue to play by design, shares of the midstream power company could hit $30 by mid-August.
A continuation wedge kicked things off on July 7 after Enterprise Products plunged below $23 for the first time since March 2022. The bullish continuation wedge occurs when an uptrend is temporarily interrupted before finally continuing. It marks a period when the bears trying to wrangle over control of a stock but are overpowered by the bulls. The wedge formed by two converging trendlines is broken and the uptrend resumes. For Enterprise Products, the pattern was about four months in the making and aims for a run to at least $29.
The stock stumbled shortly after the continuation wedge formed, but another pattern emerged to save the day and support the uptrend. This was a July 19 double bottom whose stock has not looked back. On July 26, Enterprise Products traded appropriately around $26 – and with two technical patterns in its favor, it appears to have set its sights on $30.
Ford Motor is part of the londonbusinessblog.com Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.