Bullish reversals are a popular tool and strategy for technical traders and investors as they offer the potential for significant gains. The trick is finding a stock that is reversing that is worth investing in. Reversals are a tricky business and often go unconfirmed. The textbook definition of stock market reversal is a change in direction, which could easily be from a downtrend to a sideways consolidation or from a downtrend to an uptrend.
Think about this: how many stocks in a downtrend form a Vee-Bottom? Not many because that kind of action is very rare. The stock will likely fall into the pattern of hitting bottom, forming a bottoming pattern, breaking a critical resistance point, and then confirming prior resistance as support. In this scenario, the market will clearly show its intention and stock prices will increase. If this action coincides with a bullish investment scenario, as with the 5 tech stocks on this list, capital gains are more a matter of when than if.
Braze, Inc: Get Engaged With This Market
Braze, Inc. (NASDAQ: BRZE) operates a customer engagement platform engaging with clients. The Q2 results included better-than-expected top and bottom-line performance, 33% top-line growth, 500 basis points of outperformance, and strong guidance. The guidance has analysts raising their targets for this year and next year, with the next expected to produce 25% top-line growth and near-break-even operations.
Analysts are also raising their stock price targets. The consensus is up almost 1000 basis points since the Q2 release and implies about 15% upside. A move to that level, above $53, would put the market above critical resistance and well on the way toward confirming a complete reversal.
Freshworks: Showing Support At Critical Levels
Freshworks (NASDAQ: FRSH) is another customer engagement platform offering SaaS services centered on customer support, email, telephone, and social media. Its customer services is built on AI and is gaining traction with users. Its Q2 results included top and bottom-line outperformance, 20% top-line growth, and raised profit guidance.
The results are driven by client growth and penetration, leading the analysts to up their targets. The EPS target for this year doubled over the summer, and growth is expected to continue next year.
Analysts are raising their stock price targets for this issue. The consensus is up 33% over the last 90 days and implies about 20% upside. A move to the $24.14 consensus level would put the stock at a new high and confirm its reversal.
Zscaler: About to Scale New Highs?
It’s the same story with Zscaler (NASDAQ: ZS). The company reported top and bottom line strength and guidance that led the analysts to raise 2023 and 2024 targets. The company is expected to grow the top line by 25% next year, and analysts are also raising the stock price target.
The consensus is still down YOY but up compared to last quarter and 16% above the current price action. High enough to put it on the verge of breaking critical resistance, and the freshest targets are well above consensus.
CrowdStrike: Rally Mode
CrowdStrike (NASDAQ: CRWD) is the same story. Its results, guidance, and analysts' activity have its market confirming reversal and poised to move higher. Based on the analysts' consensus estimate, the stock could gain about 10%; based on the analysts' high price target, the most recent analyst activity, and technical chart patterns, this stock could easily move up to the $200 level, another 10% on to of the consensus.
Amazon Returns from the Depths
Shares of Amazon (NASDAQ: AMZN) corrected hard over the last year but are well on their way to recovery. The market seems to like the new CEO and the direction he is taking the business. The analysts' activity has Amazon moving steadily up the ranks of Most Upgraded Stocks and in the 3rd position with a potential of 17% upside at the analysts' consensus midpoint.
That puts the Amazon market well above critical resistance and on track to retest the all-time high.
