S&P 500: The Long And Short Of It - Cisco, Welltower, Applied Material

Welltower Inc CFD/DFT: The stock remains in a strong uptrend and is now consolidating just beneath record highs. The 20-day eMA is holding as support and we’re now watching to see it can break out of compression to new highs. Given trend strong trend and the fact it has had time to consolidate just below the high means this could be of interest to momentum traders on the daily and intraday timeframes.

  • A break above 92.50 assumes bullish trend continuation. Ideally, a break will be seen on higher volume, or traders could wait to see if we see a daily close or 92.50 is respected as support before committing.
  • An open target could be used as a breakout would be new record highs.
  • A break below 90.35 signals mean reversion, although the bullish trendline is also nearby to provide potential support.
  • A break of the trendline could be taken as a sign a deeper correction could be underway.

Applied Materials CFD/DFT: The bullish trend is less established than Welltower’s, yet a cup and handle continuation pattern has caught our eye. Prices have found resistance just below 52.60 and the two recent higher lows are what form the cup and handle components. Moreover, the 50-day eMA acted as support ahead of the latest leg higher. Of course, it’s possible resistance could hold for a while long, in which case look for the pattern to morph into a continuation pattern such as an ascending triangle. But ultimately, we’re looking for a breakout above resistance.

  • A break above 52.60 assumes bullish trend continuation. If it breaks higher without a retracement prior, then it confirms the cup and handle pattern.
  • The bias remains bullish above 48.78. If we see a pullback from the highs, we’d seek a higher low above 48.78 to show bullish pressure continues to build.
  • Whilst the pattern projects an initial target around 60, swing highs around 56.94 and 58.40 make viable interim targets.

Cisco Systems CFD/DFT: It’s far from perfect as we’re unable to draw an ideal neckline, yet the formation screams head and shoulders top. As the trend is clearly bearish, the H&S is now a continuation pattern which could target the 41-42 area if successful.

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