*TA as of 12/3/24
Hi everyone! Today I’ll be updating my TA on an AI company (and Jensen Huang’s favourite word), which I last charted several months ago:
C3.ai, Inc. (NYSE: AI)
A look at the weekly chart shows that AI was previously trading in a cup and handle pattern, with an 8-month handle from Jun’23 to Feb’24. It recently broke out from its handle (pink trendlines) and backtested the breakout. Solely based on the technical pattern, we should minimally see a move back towards the top of the cup at 44.90 before pushing towards new highs. The next big resistance sits at around 55.58, hence my target price. A small bullish divergence was also formed when we retested the 23.61 area to form a “W” pattern.
On the daily chart, I note that AI might be trading in a near-term ascending broadening wedge expansion pattern, post-breakout. I’m expecting the stock to retest the 28.15 level and base there before pushing towards the 40.68 level, where we had formed a top-heavy wick in Aug’23 before pushing lower.
It might appear that the entire stock market is in a speculative bubble, however, stocks like AI are still down more than 80% from their highs. In the event of mean reversion, AI could eventually retrace ~50% of its move down back towards 97.03. Improved fundamentals and earnings guidance could take us there, amidst rotation into small caps, which is gradually becoming a theme of 2024.
Sentiment: BUY
Summary (with Price Targets - NFA):
Broke out of cup and handle pattern, with a longer-term measured move towards 55.58. Near-term ascending broadening wedge pattern with an expected move towards 40.68.
Investors can start to average in at current levels down towards 28.15, where it is expected to find support for the next leg higher and provide for a long-term entry.
Earnings season is over so there is no notable catalyst that can drive AI higher until May, so it is likely to be a high beta play that follows broader market movement (i.e. it might see stronger moves both to the upside and downside).
Alright, that’s all for this newsletter. Till next time!
$C3.ai, Inc.(AI)$ $NVIDIA Corp(NVDA)$ $SUPER MICRO COMPUTER INC(SMCI)$ $Snowflake(SNOW)$ $Salesforce.com(CRM)$
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