Headlines
- Broadcom Holds Gap and Breaks Wedge Line
- A Possible Pennant for CrowdStrike
- Walmart Forms Large Cup-with-Handle
- Amgen Breaks Out with Strong Surge off Support
- Incyte Breaks Flag Line
- Cencora Leads Healthcare with New High
- Cardinal Health Breaks Out after Normal Retracement
I will update the Market Regime page later today.
Previous Reports with Stock Trends, Setups and Breakouts
October 1st [1]: COIN, MSFT, CSCO, AMD, HEI and ROK
September 24th: [2] ADSK, DGX, DRS, MELI, AEE, CNP, ETR and EVRG
September 10th: [3] COIN, DASH, GILD, HWM, KTOS, MKSI, PLTR and VEEV
September 3rd: [4]DIS, BROS, ELF, EW, DRS, AMZN and QCOM
August 27th [5]: CTVA, MELI, CHWY, LNG, BSX, AME, TDY, HON, AAPL, CSCO
The stock market remains in bull mode with tech, utilities and industrials leading the chart. There is also a newcomer to the party as the Healthcare SPDR (XLV) broke out over the last two weeks. Today’s report covers two tech stocks, a leading consumer staple and four healthcare stocks. Symbols covered include: AVGO, CRWD, WMT, AMGN, INCY, COR and CAH
Broadcom Holds Gap and Breaks Wedge Line
Broadcom (AVGO) is part of the Semiconductor ETF (SMH), which is leading the market. AVGO is also in a strong uptrend with new highs in September and price well above the rising 200-day SMA. The stock is outperforming as the price-relative hit a new high in September. Short-term, AVGO surged with a gap after earnings in early September. It then fell back with a falling wedge and firmed in the gap zone. AVGO broke the wedge line with a pop last week. I view the wedge as a short-term corrective pattern after the surge from 285 to 370. The gap zone acts as support and this wedge also retraced around 50% of the surge. A 50% retracement and return to the gap zone are normal for pullbacks. More importantly, the breakout signals an end to the pullback and a resumption of the bigger uptrend. A move below 320 would call for a re-evaluation.
A Possible Pennant for CrowdStrike
CrowdStrike (CRWD) is part of the Cybersecurity ETF (CIBR). The stock was featured on August 29th [6] as it broke out with a surge above 440. I suggested a re-evaluation on a close below the 200-day SMA and CRWD did not close below this key moving average during the early September pullback. Sometimes we get a little lucky! CRWD surged from 410 to 510 in September and then consolidated the last 13 trading days. Even though it is a bit early to draw the lower line, I see a potential pennant taking shape and a breakout at 500 would be bullish. This is a high and tight pennant, which is a short-term bullish continuation pattern.
Plan your Trade, Trade your Plan and Diversify
There are two ways to approach these short-term setups.
First, trade them as swing trades. A falling flag or wedge breakout is bullish and this signal remains valid until a break below the re-evaluation level, which is usually the low just before the breakout. For short-term trading, I usually set a profit target and close one third to one half of the position when this target is reached. A trailing stop is then placed to ensure that the entire trade does not result in a loss.
Second, use short-term setups to participate in the bigger uptrend. Bullish setups stem from short-term oversold conditions, falling wedges/flags or pullbacks. Instead of a re-evaluation level, the exit signal is based on a long-term trend change and a trend-following exit. Signals include a cross below the 200-day SMA, a major support break, a Chandelier Exit or a Keltner Channel break. This means the potential loss will be larger, but there is also a possibility to take part in an extended uptrend.
Thus, plan before making the trade, and then trade according to that plan. Also consider position sizing and diversification to spread the risk.
Walmart Forms Large Cup-with-Handle
Walmart (WMT) is part of the Consumer Staples SPDR (XLP), which has been lagging the tech-driven market this year. WMT, however, is not exactly lagging because it is very close to a 52-week high and above its rising 200-day SMA. Overall, a large cup-with-handle formed from February to October. This bullish continuation pattern would be confirmed with a break above the February-August highs. Short-term, WMT surged in the first half of September and then formed a falling flag into October. This is a short-term bullish continuation pattern. With a break above the upper line, WMT is poised to continue the early September advance. There is a ton of support in the 94-95 area as WMT bounced off this area from June to August (blue shading). A close below 94 would negate the cup-with-handle.
Amgen Breaks Out with Strong Surge off Support
The next four stocks come from the Healthcare SPDR (XLV), which broke out with a big surge the last two weeks. First, we have Amgen (AMGN) showing signs of increased buying pressure with higher lows this year and two breakouts. The higher lows mean buying pressure came in at higher levels, while the higher highs show buying pressure strong enough to push prices above the prior high. This is a bullish combination. Most recently, AMGN fell back to the June low, firmed in September and broke out with a surge to 300. I view this breakout as bullish. AMGN established support in the 270-275 area the last four months (blue shading). A close below 270 would argue for a re-evaluation.
Incyte Breaks Flag Line
The next chart shows Incyte (INCY), which is a biopharmaceutical company. With a market cap of $17 billion, it is much smaller than Amgen, which has a market cap of $159 billion. Also note that Incyte has above average volatility (risk). On the price chart, INCY surged 32% in April-May, consolidated with a flag into July and broke out in late July. It then surged another 32%, consolidated with a falling flag and broke out last week. This is a high and tight flag, which is a short-term bullish continuation pattern. I view the breakout as bullish. The pink line marks the Chandelier Exit (22,3) at 82.81. A close below this level would warrant a re-evaluation.
Cencora Leads Healthcare with New High
The next chart shows Cencora (COR), which is a company that distributes pharmaceutical products and provides operational services. The stock led the market higher from January to April as it surged to new highs. After a long triangle consolidation into August, COR broke out with a surge in mid August. Post breakout price action was choppy, but the breakout ultimately held as the stock established support in the 285-290 area. COR also hit a new high in early October, which means it remains a leader. The middle window shows the price-relative falling from May to September and turning up the last few weeks as COR starts to outperform again.
Cardinal Health Breaks Out after Normal Retracement
Cardinal Health (CAH) distributes healthcare products and services to hospitals, clinics and labs. On the price chart, CAH led the market with a strong advance from August 2024 to June 2025. This advance is punctuated with a 39% surge off the April low. After becoming overbought in late June, the stock corrected with a decline that retraced around 50%. This is a normal retracement for a correction within an uptrend. The 39% surge is two steps forward and the correction is one step backward. CAH firmed in the 145-150 area from mid August to late September and broke resistance on September 23rd. Trading after the breakout has been choppy, but the breakout is holding and I am bullish on CAH. The blue shading marks the support zone in the 145-150 area, a break of which would call for a re-evaluation.
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