Exhibitions of powerful price momentum are rare. Since the market bottom in 2002, there have been eight occasions when the percentage of S&P 500 above their 50 dma has surged from below 15% to over 90% in a brief period. That latest episode occurred when stock prices soared off the bottom in October 2023. These price surges were usually resolved in either a short-term consolidation or setback, but the S&P 500 was invariably higher a year later with a 100% success rate.
I conducted a bottom-up scan of stock charts to look for technical uptrends and strong breakout formations. The scan isn’t meant to create a complete list of stocks with bullish technical outlooks. My evaluation framework is based on two components: the simple analysis of a weekly chart of the stock in the top panel, and the relative performance of the stock against the S&P 500 in the bottom panel. U chose the weekly chart as a way of filtering out the noise from daily price movements and better show the intermediate price trend. Ideally, both should be either in uptrends or breaking out on both an absolute and relative basis. I found at least 29 charts with bullish technical patterns, none of which should be considered to be buy recommendations without further individual fundamental due diligence. Taken together, I came away with a stronger conviction of intermediate bullishness for the stock market, sector and industries. As well, this bottom-up analysis also pointed to bullish macro conclusions about the economy.
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