Commscope Stock: This Is Why COMM Stock Could Surge
COMM Stock: Breakout Is Imminent
Chart courtesy of StockCharts.com
COMM stock has spent the last 16 months putting in a beautiful chart pattern. The pattern, highlighted in orange, is a bullish setup that is known to traders as a cup-and-handle formation. Traders use these setup patterns to identify continuation patterns that reaffirm the predominant trend. This pattern is completed when the price closes above the blue horizontal resistance line. These patterns are especially useful because, not only do they give traders a direction when the pattern completes, but a target price can also be generated.
The target price is obtained by taking the depth of the cup and extrapolating it above the horizontal resistance line. Using this method on the COMM stock chart gives a potential price objective of $46.00, and it represents a return of 40% from current levels.
The indicator in the lower panel labeled “MACD” is the moving average convergence/divergence, a simple and effective trend-following momentum indicator. Signal-line crossings are used to distinguish between bullish and bearish signals. This signal is currently bullish and this increases the odds that the bullish pattern will complete and send Commscope stock to new all-time highs.
The following Commscope stock chart illustrates how another momentum indicator reaffirms the bullish premise.
Chart courtesy of StockCharts.com
The 50-day moving average and the 200-day moving average can be used to generate a momentum indicator. There are only two possible signals that can be generated using this method. A golden cross indicates that a bull market is on the horizon, and a death cross indicates that a bear market is on the horizon.
The signal is confirmed when the faster moving average (50-day moving average) moves above or below the slower moving average (200-day moving average). The golden cross and death cross are exact opposites.
In November 2015, COMM stock generated a death cross and proceeded to sell off. In the months following this indicator, Commscope stock lost 30% before a bottom was finally established.
In May 2016, COMM stock generated a golden cross, and this signal is still intact. The tailwinds created by this signal should propel this investment higher. Couple this indicator with ones I outlined on the chart above, and I have the necessary pieces of information to produce a trading bias.
Bottom Line on Commscope Stock
I am bullish on COMM stock, and I believe that a bullish breakout is on the horizon that will send shares soaring to new all-time highs. My bias will remain bullish until the Commscope stock chart suggests otherwise.