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Chart Advisor

1/ Looking Opportunities for there Generation Through Quadrant Crossovers

2/ Multi-month Breakout in CI

3/ ORCL Staring at a Meaningful Upmove

4/ Promising Setup in ACGL

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Looking Opportunities for there Generation Through Quadrant Crossovers

Courtesy of Optuma

RRG Quadrant crossovers provide an important insight when one is looking for the presence of Relative Strength. It helps us find those stocks where when coupled with good chart setups, one can find alpha-generating opportunities. In the above chart, we scan for Quadrant Crossovers. To find incremental alpha, we have further filtered the scan results by 1.0 standard deviation. As a rule of thumb, the larger the distance of the stock from the center, the greater the alpha it is likely to generate. Out of these many candidates, we pick up three stocks that show a good technical setup on the charts. With just one day to go before the week ends, this setup is very less likely to change.

Multi-month Breakout in CI

Courtesy of Optuma

The high of 340 that was first tested in December 2022 is being tested again. CI marked a classical double top resistance earlier this year. After a brief consolidation, the stock is staring at a potential breakout. While tracking the upper band, the prices are seen inching higher, it has closed a notch above the crucial resistance point on Thursday. The RS line against the broader S&P500 index is inching higher; it has crossed above the 50-period MA. If the breakout happens on the anticipated lines, the stock can go on and test 365-390 levels over the coming weeks.

ORCL Staring At a Meaningful Upmove

Courtesy of Optuma

The price action in ORCL over the past five months has led to the formation of a symmetrical triangle on the charts. Though symmetrical triangles are neutral formations, most of the time they end up acting as continuation patterns which generally resolve with a continuation of the prior trend. Though price confirmation is always required, a few signs appear that shows that the stock is likely to resume its upmove. The RRG has seen a quadrant crossover; the stock has rolled inside the improving quadrant of the RRG which is a sign of a potential beginning of a phase of its relative outperformance. While the stock stays in this formation, it has consistently taken support on its 50-period MA which is seen almost acting as its proxy trend line. OBV hovers near its high point.

Promising Setup in ACGL

Courtesy of Optuma

While some brief consolidation cannot be ruled out, ACGL too is staring at a fresh breakout. This stock has largely stayed in an uptrend; intermittent corrective retracements have found support at its 50-, and 100-week MA. Recently, the stock saw a strong rebound from its 50-week MA and is seen testing the prior highs. This stock has also rolled inside the improving quadrant of the RRG. This indicates the beginning of the relative performance of the stock against the broader markets. While the actual price breakout is yet to take place, OBV has already made a new high indicating strong accumulation and participation of volumes in the move. An expected resolution of the current setup has the potential to take the stock higher towards 93 and 96 levels over the coming weeks.

About This Week's Author

Milan Vaishnav, CMT, MSTA serves as a member of the Regulatory Committee formed under the CMT Association, India. He is a capital market professional with experience spanning over two decades. His core expertise includes consulting in Portfolio/Funds Management and Advisory Services. Milan is the founder of ChartWizard FZE, and Gemstone Equity Research and Advisory Services.

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