Comerica Incorporated (CMA) is a major financial services company headquartered in Dallas, Texas. The CMA provides a wide range of products including commercial banking, wealth management and retail services, making it a key measure of the health of the middle market business sector.
Long-range vision: Head and shoulders inverted
The basic story on the weekly chart is the completion of a huge operation Inverse Head and Shoulders (IH&S) pattern. This classic bottom formation indicates that a multi-year downtrend has officially reversed.
By calculating the distance from the head to the neckline and projecting it up from the breakout point, we arrive at… Measured move target at $119.78. This target represents a significant upside from current levels, provided the structural integrity of the chart remains intact.
Near-term caution: overbought conditions
While the long-term target is compelling, the stock is currently overbought in the near term. After the recent vertical movement, technical indicators indicate that the price has extended too far, too fast. Chasing a breakout at these levels carries higher risks, as a period of consolidation or “moderate” pullback will likely be needed to absorb these gains.
Strategic purchasing levels
For investors looking to build or add to a position, the chart identifies three distinct entry areas based on risk tolerance:
- Aggressive Buy $83.55: This level is for those who believe the momentum is strong enough to surpass a deep correction.
- Moderate purchase of $76.75: It is located slightly lower, offering a better risk-reward ratio by waiting for a partial bounce of the recent rise.
- Buy Conservatives for $70.40: This level corresponds to the major support of the IH&S neckline. Waiting for this entry provides the highest margin of safety, as it experiences a “polarity” that turns previous resistance into support.
