Tradeable decline discovered after trend reversal surge | chart of art

Most stocks surged in the fourth quarter of 2023 as did the broader market. SPY and QQQ extended gains in 2024, but some stocks did not participate and fell. Nonetheless, some of these stocks are showing signs of a long-term trend reversal, and the 2024 decline appears to be corrective. This week we’re focusing on one of those stocks. Crown Castle (CCI) is showing signs of a new uptrend and the stock is showing a tradable pattern after the pullback. This is TrendInvestorPro’s specialty.

The chart below shows the weekly candlesticks for Crown Castle (CCI), including the 40-week SMA (red) and 10-week SMA (green). These moving averages are equivalent to the 200-day and 50-day SMAs. CCI, which continued its downward trend until October 2023, surged above the 40-week SMA in late November and crossed the 10-week SMA in early January. Not only is the 10-week SMA above 40, it is up more than 5%. This strong cross suggests that an upward trend is emerging.

The indicator window displays the percentage difference between the 10-week SMA and the 40-week SMA. Horizontal lines were added at +5% and -5% to further filter the signal and reduce whipsaw. If it moves above +5%, it is bullish, and if it moves below -5%, it is bearish. This indicator was strong from May 2017 to March 2022, when it exceeded less than -5%. It surpassed the MA (10,40,1) by percentage and then +5%, turning into a bullish trend in early January. This indicator is part of the TIP Indicator Edge plugin for StockCharts ACP.

Bullish patterns and breakouts will continue to indicate an upward trend. It is taking shape. CCI surged about 38% from late October to early December before correcting in February. This pullback appears to be corrective as it retraces half of the previous surge, forming a descending wedge (blue line) and returning to the 40-week SMA. A sharp rally followed by a correction followed by a 50% retracement (gray line) is normal. Think of it as two steps forward and one step back. The 40-week SMA acts as support, and the stock has been solidly just above this moving average over the past six weeks. The only thing missing here is a pattern breakout. There is resistance at 113 (red line) and a break here would be bullish. If a breakout occurs, we will reevaluate the closing price below the February low.

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