It’s a point and figure price chart pattern that indicates a possible trend reversal from down to up. Of course, there are no guarantees that the “triple top breakout” reversal is definite and irreversible, but the old-school charting technique remains useful when used in connection with other indicators such as momentum and sentiment.

This week reveals the pattern beginning to make its appearance on some stocks that have sunk dramatically over the last 52-weeks — and on some that seem to have bottomed weeks ago. Chart price analysis like this is often frowned upon by fundamental analysts but that may be what makes it valuable as a contrarian view.

NIO Inc.

The triple top breakout above the previous resistance at 20 is confirmed by the move above the down trend line marked in red. Look at how the price of NIO has already doubled from the low of 12 to its recent price of 24. It’s taking a breather today and pulled back to 22.

NIO is an auto manufacturer in China traded on the NYSE with an average daily volume of 70 million shares, a level of liquidity that makes it possible for large investors (such as hedge funds) to get in or get out. The short float is a 5.35%, high enough to suggest many non-believers.

Noah Holdings

The China-based asset management company is down from the early 2021 peak of 52 and may have bottomed out at 15.50 earlier this year. The triple top breakout above previous resistance at 19 may indicate that buyers are changing their negative view of HOAH Holdings.

The investment firm almost looks like a value stock at this point, now trading at just above its book value with a price-earnings ratio of just 7.98. It’s lightly traded for a New York Stock Exchange listed company with an average daily volume of just 308,000 shares, making it tough for large institutional investors to come in.

Teladoc Health

A down trend from 96 at the beginning of the year to a low of 28 is quite a dramatic move. Teledoc had been considered one of the hot, innovative health information services stocks. It now trades below its book value. Are its growth stock days over?

This point-and-figure chart suggests a price low may be in with the triple top breakout above the previous resistance at 36. Teledoc has a long way to go, however, with several more resistance levels to break above and a support level that has to hold.

No single indicator can predict future price levels. The benefit of checking this kind of point-and-figure pattern is its ability to show where previous resistance levels are being taken out. That means buyers have taken over from sellers at that price area and this is at least interesting when considered with other factors.

Not investment advice. For educational purposes only.


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