Market's 'ascending triangle' signals breakout

Published Wed, May 20 20159:30 AM EDT

The market is forming an interesting chart pattern that one newsletter writer believes will lead to a breakout as early as this week. Here are the details on that missive and the other best Wall Street research that came across the desk of CNBC Pro on Wednesday. Christopher Michael of Intelligent Value Alert predicted a move higher in the U.S. stock market, possibly as early as this week. "While indices have been consolidating the last several months, it appears that conditions may be ripe for significant breakout. This coming week is set up to be potentially the launch point of a powerful summer rally. Beginning last June, many market indices began to consolidate following the significant rally that ran from late-2012 to mid-2014. For the past 10 months, many major indices have been in volatile, sideways consolidations. There is a resistance zone at 11,000 - 11,100 on the broad market NYSE index. There is also an upward sloping trendline that began in October 2014, which, combined with the resistance line, forms a triangle pattern. According to StockCharts.com, 'The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern. Ascending triangles are bullish patterns that indicate accumulation.' Prices have now broken through the overhead resistance line, and we believe they are headed higher as a continuation of the bullish environment in 2013. " ( Excerpt comes via Investors Intelligence weekly newsletter.) Source: FactSet Jefferies recommends buying shares of the "Mad Men" creator and calls for a 15 percent rally from here. "We view LGF as an attractive pure play on the LT (long term) value of premium content across platforms. Moreover, the co's risk mitigation strategy provides downside protection in an inherently volatile business. We estimate LGF will generate 8 percent EBITDA growth and 11 percent EPS growth over the next 3 yrs, well ahead of peers. ... In an era where content is king, LGF has demonstrated an ability to consistently create hit content. With audience fragmentation at TV networks increasing, the one constant will be increasing demand and programming costs for the industry; LGF is poised to benefit at both its film and TV segments, while not being subject to the volatility in advertising." The research firm predicts shares of the security software company will rally 21 percent from Tuesday's close. "While the stock has rebounded from a challenging 2H14 (+32 percent YTD), we believe shares can continue to move higher as the Mandiant acquisition is now fully integrated and the company's product and subscription offerings appear to dovetail well with secular trends in the cybersecurity market, which remains very constructive. ...The company's analyst day in early June could serve as a modest catalyst for the stock, and we believe the relative valuation gap between FEYE (6.8x EV/CY16 Sales) and cyber peers like PANW (10x) and CHKP (8.6x) can continue to close." — With reporting by CNBC's Michael Bloom .

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