Technical Analysis: SSNC Stock Is Primed for Further Gains

 ssnc stock analysis
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SSNC Stock: Flexing Its Muscles

If it’s not one thing, it’s another, and at the moment, trade talks are causing the markets to swing violently. This high volatility market caters to traders, but long-term investors might not be so enthused with an elevated level of volatility because these wild swings can be unsettling.

In times of duress, I recommend sticking to stocks that are exhibiting relative strength, and SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) stock is one of them. What is relative strength, you ask?

Well, let me explain.

SS&C Technologies stock has just forged a new high and, year-to-date, SSNC stock is up 27.61%, greatly outperforming the market indices, which is a show of relative strength.

Aside from just the relative strength, I am quite compelled by this investment because it has just completed a technical price pattern that is suggesting that further gains are on the horizon.

This technical price pattern is highlighted on the following SS&C Technologies stock chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the SSNC chart is an inverse head and shoulders pattern.

An inverse head and shoulders price pattern consists of three troughs. The middle trough (the head) is the largest, and first and third troughs (the shoulders) are usually of equal size. These troughs are created because a significant level of price resistance prevented the stock price from advancing. This significant level of price resistance is also referred to as the neckline. When the stock price finally breaks above it, it suggests that resistance has finally been overcome and, therefore, higher stock prices can finally prevail.

The technical price pattern was completed on March 5, 2018, and it currently suggests that higher SSNC stock prices are on the horizon. For those looking for a price objective, the head and shoulders pattern is kind enough to provide one as well. The price objective is created by taking the depth of the head and extrapolating that value above the neckline, which produces a price objective of $56.00.

In actuality, the head and shoulders pattern is just a small piece of a larger wave structure that is highlighted on the following SSNC stock chart.

Chart courtesy of StockCharts.com

This SSNC stock chart illustrates that the head and shoulders price pattern is part of a wave structure known as constructive price action, which consists of impulse waves and consolidation waves, and is responsible for creating and sustaining a bullish trend.

The wave highlighted in green is the impulse wave, and this wave captures the stage in a bullish trend where a stock makes a sustained move toward higher prices.

The wave highlighted in purple is the consolidation wave, and this wave captures the stage in a bullish trend where a stock corrects and refrains from advancing. This is not a reason to dismiss this wave because it is, in fact, a very important wave. Consolidation waves create the necessary conditions so a new advancing impulse wave can follow.

The inverse head and shoulders price pattern doubles as a consolidation wave, and its completion on March 5 suggests that a new advancing impulse wave is now in development.

The notion of higher SS&C Technologies stock prices is being reinforced by the moving average convergence/divergence (MACD) indicator.

MACD is a very influential momentum indicator that determines whether bullish or bearish momentum is influencing the trading action in a stock. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices. The MACD indicator is a very influential indicator because a stock cannot sustain an advance or a decline unless the applicable momentum is supporting it.

The wave structure on the stock chart is a testament to this notion because both the impulse wave and the consolidation waves have been accompanied by the appropriate MACD signal.

The completion of the head and shoulders pattern coincided with a bullish MACD cross, reinforcing the notion that higher SS&C Technologies stock prices, in the form of an impulse wave, are now in development.

Analyst Take

The price action and indicators on the stock chart are suggesting that higher SSNC stock prices are now in development, and therefore, a bullish view on this investment is warranted.